Intra-city Tiebout: the economic consequences of crossed borders

This paper examines a new element of the Tiebout process, which is whether Tiebout mobility impacts the organization of residents and firms within a single metropolitan area. Unemployment insurance (UI) is a state-wide policy. We therefore examine whether variation in UI policy outcomes causes firms and residents to alter their locations within the local urban economy. Our empirical process is to use a matching pairs regression discontinuity design based on the nine largest cities where state boundaries cross the metropolitan area. We find that Tiebout mobility results from the UI wage replacement rate, the UI eligibility rate, and UI taxes.