New evidence of the effect of transaction costs on residential mobility

Authors:
  • MLMichiel Van Leuvensteijn
    Michiel Van Leuvensteijn
  • JOJ. Van Ommeren
    J. Van Ommeren
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  • 1 January 2003
Abstract
Transaction costs have attracted considerable attention in the theoretical literature on residential mobility. In many European countries, these costs mainly consist of ad-valorem transaction costs. In the current paper, we demonstrate empirically for the Netherlands that the transaction costs have a strong negative effect on the owners' probability of moving. Under a range of different specifications, it appears that a one percent-point increase in the value of transaction costs - as a percentage of the value of the residence - decreases ownership to ownership residential mobility rates by eight percent. Our estimates are consistent with the observation that in the Netherlands ad-valorem transaction costs mainly consist of buyer transaction costs.
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