Taxation Effects on Migration and Local Public Goods

The distribution of tax burdens and the provision of local public goods constitute core determinants of individual and firm location choices. In theoretical models such as Tiebout sorting, households “vote with their feet” by relocating to jurisdictions that best align with their preferences for tax levels and quality of public services, including education, healthcare, infrastructure and cultural amenities. Empirical studies demonstrate that fiscal differentials—even modest variations in income, inheritance or property tax rates—can trigger substantial migration flows when residents seek optimally balanced bundles of services and levies. Moreover, the capacity of local governments to finance public goods through balanced‐budget increases in taxation influences both the attractiveness of growing metropolitan areas and the resilience of regions facing demographic decline. At the same time, top‐income taxpayers and high‐skilled workers exhibit nuanced responses, often weighing non‐fiscal factors such as cultural capital, social networks and professional opportunities alongside tax considerations. The interplay between tax competition, fiscal equalisation mechanisms and citizen heterogeneity shapes not only regional population dynamics but also pressing policy debates on equity, service provision and sustainable urban development worldwide. Emerging research spans dynamic panel models, regression discontinuity designs and rich micro‐level surveys to disentangle the channels through which taxation affects mobility and public goods provision, offering policy‐relevant insights on optimal fiscal design in a mobile economy.

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Taxation Effects on Migration and Local Public Goods publication trend

The graph below shows the total number of articles in taxation effects on migration and local public goods across all publications each year (not limited to Nature Index journals).

Technical terms

Tiebout sorting: A theoretical model in which individuals relocate across jurisdictions to match their preferences over local taxes and public goods under conditions of mobility and budget balance.

Fiscal competition: The strategic interaction between jurisdictions setting tax rates and public spending to attract or retain residents and firms.

Balanced‐budget constraint: A requirement that a government’s public spending must be fully financed by its revenue, typically through taxation.

Migration elasticity: A measure of the responsiveness of migration flows to changes in fiscal or non‐fiscal attributes of jurisdictions.

Place‐specific cultural capital: Unique cultural assets and amenities that influence individuals’ attachment to a location beyond purely financial motives.

References

1. Population growth and taxes: the effect of regional differences in the Spanish inheritance tax. The Annals of Regional Science (2024).
2. ‘But Switzerland’s boring’: tax migration and the pull of place-specific cultural capital. Socio-Economic Review (2025).
3. Population growth in growing and declining cities: the role of balanced-budget increases in local government spending. The Annals of Regional Science (2024).