American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Land, Wealth, and Taxation
American Economic Journal: Microeconomics
(pp. 249–78)
Abstract
This paper examines the role of land in wealth dynamics and its consequences for efficiency and inequality. We focus on the interplay among agents' bidding for location, mortgage market imperfections, and inheritance in a model in which agents leave to their heirs financial bequests and their housing wealth. The borrowing constraint generates a housing return premium and spatial wealth sorting, which translate into persistent wealth inequality. Since altruism and the borrowing constraint distort land price formation, we show that taxing land rent transmitted between generations is optimal. Land taxation cannot be disconnected from taxation on intergenerational wealth transfers.Citation
Brunetti, Roberto, Carl Gaigné, and Fabien Moizeau. 2026. "Land, Wealth, and Taxation." American Economic Journal: Microeconomics 18 (4): 249–78. DOI: 10.1257/mic.20240094Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- D64 Altruism; Philanthropy; Intergenerational Transfers
- H71 State and Local Taxation, Subsidies, and Revenue
- Q24 Renewable Resources and Conservation: Land
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R31 Housing Supply and Markets
- R52 Regional Government Analysis: Land Use and Other Regulations