Abstract

We are in the midst of a migration bubble within our country, with several states losing population at rapid rates, and other states that are gaining citizens at an equally blazing speed. There are several potential reasons for someone to decide to move. Whether it be job opportunities, better public amenities, or a warmer climate to name a few. However, one of the most influential factors that drive decision making is a consumer’s pocketbook, and income tax rates have a significant impact on how much money, and therefore utility, that individuals can actualize. For my independent study, I will be using state level characteristics and income tax rates of five mid-Atlantic states, Ohio, Pennsylvania, Maryland, Delaware and West Virginia, to analyze which factors affect the migration rates of these states and therefore drawing conclusions about what influences the consumers’ decision to move.

Contemporary economic theory suggests that consumers are sensitive to changes in tax rates and will therefore flee to areas with lower tax if their state of residence raises its income tax rate. However, through the review of relevant literature it suggests that while this theory has value, several other factors such as weather and quality of public goods also impact an individual’s derived utility from a state of residence. To test this relationship, I have constructed a panel data set containing several variables, including the main independent variable is the dollar weighted average marginal tax rate for residents in each state, along with my dependent variable which is net migration inflow/outflow along with variables controlling quality of education, states average temperature, median income, and unemployment rate. The results of this analysis are inconclusive, which points to the endogenous relationship between tax collection and quality of life within a state.

Advisor

Tian, Huiting

Department

Business Economics

Publication Date

2025

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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