Bunching

Henrik Jacobsen Kleven ()
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Henrik Jacobsen Kleven: Department of Economics, London School of Economics, London WC2A 2AE, United Kingdom

Annual Review of Economics, 2016, vol. 8, issue 1, 435-464

Abstract: Recent years have seen a surge of applied work using bunching approaches, a development that is closely linked to the increased availability of administrative data. These approaches exploit the incentives for bunching created by discontinuities in the slope of choice sets (kinks) or in the level of choice sets (notches) to study the behavior of individuals and firms. Although the bunching approach was originally developed in the context of taxation, it is beginning to find applications in many other areas, such as social security, social insurance, welfare programs, education, regulation, private sector prices, and reference-dependent preferences. This review provides a guide to bunching estimation, discusses its strengths and weaknesses, surveys a range of applications across fields, and considers reasons for the ubiquity of kinks and notches.

Keywords: bunching estimation; kinks; notches; structural parameters; optimization frictions; reference dependence (search for similar items in EconPapers)
JEL-codes: C01 H00 J01 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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