Practice Job Talk: Juan Nicolas Herrera, University of California, Santa Barbara

Speaker

Juan Nicolas Herrera, University of California, Santa Barbara

Biography

Juan Nicolas Herrera earned his Bachelor’s in Economics jointly from Universidad del Rosario in Colombia and the Toulouse School of Economics in France. He also holds a Master’s in Public Policy and Development from the Paris School of Economics and a Master of Arts in Economics from the University of California, Santa Barbara (UCSB). Prior to joining UCSB, he was a Research Fellow in the Research Department of the Inter-American Development Bank. During his graduate studies, he served as an instructor for undergraduate courses in public economics and statistics and worked as a research assistant for Professor Alisa Tazhitdinova. His research interests include public economics, housing markets, labor economics, and applied econometrics. His current research focuses on the incidence of taxation in housing markets.

Title 

"Value-Added Tax Incidence in Housing Markets"

Abstract

We study the VAT incidence in the housing market, exploiting a 2016 reform inChile that introduced a 19% tax on sales by developers while exempting resales by in-dividual homeowners. Using rich administrative data covering nearly the universe ofresidential transactions, we estimate a difference-in-differences design that leveragesthe differential tax treatment across seller types. Apartment prices per square meterrose by approximately 11.8% within three years, with consumers bearing 75% of theeffective tax rate. This increase combines two margins: an 8.5% rise in nominal pricesand a 3.2% decline in unit sizes, a form ofhousing shrinkflationvisible in constructionpermits before any price response. Despite the large tax, transaction volumes did notdecline. Purchase contracts surged by 33% before implementation and fell by a com-parable amount immediately after, indicating pure re-timing rather than a permanentdemand response. The tax raised revenue without reducing market activity, but at thecost of higher prices and smaller apartments for buyers.

JEL Classification Codes: H22, H25, R21, R31