Place Characteristics and Residential Location Choice Among the Retirement-Age Population

Abstract

OBJECTIVES: We investigate the association between an extensive set of location-specific factors and the propensity of retirement-age individuals to remain in, or relocate to, those locations. In particular we investigate whether state and local fiscal factors influence the migration decisions of retirees, and we study the relative importance of fiscal and other factors in these decisions. METHODS: We place decisions regarding whether to move and where to locate in a single discrete-choice framework. We estimate an individual-level location-choice model by using a combination of place-characteristics data and Census county-to-county migration data for the period 1985-1990. RESULTS: We find that levels of tax burdens and public services can affect location decisions. Of the fiscal variables, income taxes have the largest relative effects. However, other factors, including climate, economic conditions, and population characteristics, appear to play much larger roles in migration and location decisions. DISCUSSION: Although income tax reductions might influence the location decisions of recent retirees, whether or not the economic benefits associated with these population gains outweigh the accompanying revenue losses is an important area for further research. A more cost-effective strategy may be for states to focus on marketing their amenities rather than using fiscal policy to recruit retirees.

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