Working Paper No. 648

Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities

Published: October 24, 2005Pages: 30Keywords: Urban Sprawl, Full Closed City; Urban Economics; Property Tax; Instrumental Variables JEL-codes: H30; H71; R14

Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities Yan Song and Yves Zenou

This article attempts a formal analysis of the connection between property tax and urban sprawl in U.S. cities. We develop a theoretical model that includes households (who are also landlords) and land developers in a regional land market. We then test the model empirically based on a national sample of urbanized areas. The results we obtained from both theoretical and empirical analyses indicate that increasing property tax rates reduces the size of urbanized areas.

Yves Zenou

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