Wealth mobility in Norway : An event study ofwealth tax change in Bø
Abstract
In this thesis we examine the effect of a wealth tax on mobility. The lower wealth tax rate in Bø,
implemented January 2021, presents an opportunity to add an empirical study to the scarce
literature on wealth taxation.
The thesis has been written, using data on individual's income, wealth, and tax from Statistics
Norway (SSB). We have approached the research question from multiple angels: First running an event
study for the period of 2016-2021, followed by estimating the elasticity. We supplemented the
results, by running a linear probability model, examining the change in likelihood that an
individual moved to Bø.
Our findings suggest that there is an effect of the lower tax rate in Bø. On the aggregate level,
we see a slight increase of wealthy individuals, and a larger increase in the amount of wealth. We
further calculate high wealth- and mobility-elasticities. Lastly, the LP-model shows an increased
likelihood of individuals moving to Bø if they are in the upper bound of the wealth distribution.
Concluding, that the lower tax rate seems to have an effect, whereby the main influx of capital is
because the new residents have substantial wealth.