Article ID Journal Published Year Pages File Type
972005 Journal of Urban Economics 2006 16 Pages PDF
Abstract

We develop a model that adopts a log-linear utility function with a variable elasticity of substitution greater than one and show that increasing the property tax reduces city size unambiguously. We then test this result using a dataset of effective property tax rates we developed using GIS methods for 448 urbanized areas. The empirical analysis estimates a regression equation relating an urbanized area's size to the property tax rate measure and other control variables such as population, income, agricultural rent, and transportation expenditure. We find that higher property taxes indeed result in smaller cities.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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