Browsing by Author "Uusitalo, Veikko"

The deduction for a second home for work is a Finnish tax deduction that promotes regional worker mobility by subsidizing costs from a secondary work apartment. The deduction was introduced in 2008, and the maximum deductible sum was increased in 2019. In this thesis, I study if the deduction has increased the share of Finnish workers who engage in long-distance commuting. Previous research on the effects of mobility subsidies is limited, and there are no previous Finnish causal studies on the topic. Most earlier literature concerns ways of subsidizing commuting distances or relocating expenses directly. This thesis provides novel evidence of a housing-based approach to incentivizing long-distance commuting. Descriptive evidence shows that usage of the deduction for a second home for work is relatively low in comparison to many other tax deductions. On average, the deduction’s recipients are highly educated and have high earnings. My analysis on the deduction’s causal mobility effects uses difference-in-differences with Coarsened Exact Matching. The method is based on the family-related conditions for receiving the deduction, which allow me to form treatment and control groups based on deduction eligibility. I do not find evidence that the deduction would have increased mobility when all applicable workers are included in the analysis. When studying occupations where the deduction was used the most, there is some evidence that the deduction increased long-distance commuting after its introduction in 2008, but the result is not supported by all robustness checks. Overall, my results do not show clear evidence of positive mobility effects, but the analysis suffers from low statistical power and issues in study design.