The Domino Effect: Exploring Residential Mobility in the Aftermath of Municipal Mergers

In this paper, we investigate the impact of municipal mergers on residential mobility in a quasi-natural experiment setting by examining how local economic environment and neighborhood composition respond to the loss of local public administration. Utilizing comprehensive neighborhood-level data from Denmark spanning 1996 to 2015, we find that the loss of the town-hall triggers emigration, leading to a reduction in locally supplied public goods. This has also important implications for the local housing market and labor force, identified in declining housing prices and job availability, but an increase in wages and commuting distances. Ultimately, the loss of the town-hall bears major negative consequences for inhabitants.