Journal article
On Bunching and Identification of the Taxable Income Elasticity
The Journal of political economy, Vol.129(8), pp.2320-2343
08/01/2021
DOI: 10.1086/714446
Abstract
The elasticity of taxable income is vital when predicting the effect of taxes. Bunching at kinks/notches has been used to estimate this elasticity. We show that when the preference distribution is unrestricted, bunching at a kink or a notch is not informative about the size of the elasticity, and neither is the entire distribution of taxable income. Bunching identifies the taxable income elasticity when the preference distribution is correctly specified across the kink and provides bounds under restrictions on the preference distribution. We find wide bounds in an empirical example based on upper and lower bounds for the preference density.
Details
- Title: Subtitle
- On Bunching and Identification of the Taxable Income Elasticity
- Creators
- Soren Blomquist - Uppsala UniversityWhitney K. Newey - National Bureau of Economic ResearchAnil Kumar - University of Iowa, EconomicsChe-Yuan Liang - Uppsala University
- Resource Type
- Journal article
- Publication Details
- The Journal of political economy, Vol.129(8), pp.2320-2343
- Publisher
- Univ Chicago Press
- DOI
- 10.1086/714446
- ISSN
- 0022-3808
- eISSN
- 1537-534X
- Number of pages
- 24
- Language
- English
- Date published
- 08/01/2021
- Academic Unit
- Economics
- Record Identifier
- 9984585942902771
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