Agglomeration, Tax Differentials, and the Mobility of Professional Athletes

Public Finance Review, 2016 Forthcoming

30 Pages Posted: 1 Dec 2015

See all articles by Grant Driessen

Grant Driessen

Tulane University - Department of Economics

Steven M. Sheffrin

Tulane University

Multiple version iconThere are 2 versions of this paper

Date Written: November 29, 2015

Abstract

Interstate mobility may limit states’ ability to choose their desired tax policies. The forces of agglomeration, however, may allow states more leeway in setting tax rates. Moreover, mobility and agglomeration effects are not uniform for all individuals within a state, and may vary significantly across different groups. We explore this heterogeneity by examining the residential location decisions of professional racecar drivers and golfers, which have similar industry characteristics but different levels of agglomeration. Consistent with our theory, we show that tax preferences are a powerful determinant of golfer residential patterns, while agglomeration mitigates much of this effect among racecar drivers. These findings highlight the need to better understand how competition and agglomeration interact when formulating tax policy.

Keywords: Agglomeration, Tax Differentials, Mobility

JEL Classification: H21, H30, H73

Suggested Citation

Driessen, Grant and Sheffrin, Steven M., Agglomeration, Tax Differentials, and the Mobility of Professional Athletes (November 29, 2015). Public Finance Review, 2016 Forthcoming, Available at SSRN: https://ssrn.com/abstract=2696663

Grant Driessen

Tulane University - Department of Economics ( email )

New Orleans, LA 70118
United States

Steven M. Sheffrin (Contact Author)

Tulane University ( email )

New Orleans, LA 70118
United States

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