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Spatial Income Inequality in Federal Systems: The Role of Taxes, Housing Costs and Social Interactions

English title Spatial Income Inequality in Federal Systems: The Role of Taxes, Housing Costs and Social Interactions
Applicant Schmidheiny Kurt
Number 105026
Funding scheme Fellowships for advanced researchers
Research institution
Tufts University Economics Department
Departamento de Economía y Empresa Universitat Pompeu Fabra
Institution of higher education Institution abroad - IACH
Main discipline Economics
Start/End 01.10.2004 - 30.09.2006
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Keywords (6)

Segregation; Location Choice; Social Interactions; Urban Public Finance; Discrete Choice Models; Economic Geography

Lay Summary (English)

Lay summary
Metropolitan areas in the Unites States and in Switzerland show widespreadsegregation of the population by income: The center communities, generallypopulated by relatively poor households, are surrounded by a fringe ofrich suburban communities. Segregation - particularly by income andeducation - has serious economic and social consequences. Poor innercities are often seen as poverty traps transmitting economic and socialstatus from generation to generation, reducing social mobility andproducing persistent inequality.

This research project seeks to assess the causes of income segregation infiscally decentralized federations. The impact of (a) local taxes, (b)local housing prices and (c) direct social interactions on the locationchoice of households shall be quantified empirically. Knowing the relativeimportance of these factors is essential in deciding whether policymeasures -- such as tax harmonization -- can help reduce spatialdissimilarities. The consideration of social interactions is the keyinnovation of this research.

I will study the causes of segregation by studying the location choice ofindividual households in three empirical projects. The main focus is onthe discrimination between the effects from market (housing prices andtaxes) and non-market (social) interactions. The three projects will applydifferent strategies to identify the two type of effects. Location choicesin Switzerland and in the United States are compared. The estimateddiscrete choice models will allow counterfactual policy experiments andenable a study of their quantitative consequences.
Direct link to Lay Summary Last update: 21.02.2013

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