Tax-Price Elasticities of Charitable Giving and Selection of Declaration: Panel Study of South Korea

Hiroki Kato, Tsuyoshi Goto and Youngrok Kim

No HIAS-E-134, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: In this study, we estimate the tax-price elasticity of charitable giving and address the bias caused by the existence of unreported donations and self-selection to the declaration of giving. To eliminate this bias, we propose a simple estimation method based on intentionto- treat analysis. Using our proposed method and the exogenous variation in tax incentives in the 2014 South Korean tax reform, we estimate the price elasticity of donations to be −1.6 for the intensive margin and −2.6 for the extensive margin, which are more elastic than the standard results that do not account for unreported donations and self-selection. The result implies that the 2014 tax reform reduced the total amount of giving and that tax incentives should be expanded.

Keywords: Charitable giving; Tax incentives; Price elasticity; Selection; Declaration (search for similar items in EconPapers)
JEL-codes: D64 H24 H31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2023-09
New Economics Papers: this item is included in nep-pbe and nep-pub
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/80511/070_hiasDP-E-134.pdf

Related works:
Working Paper: Tax-Price Elasticities of Charitable Giving and Selection of Declaration: Panel Study of South Korea (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hiasdp:hias-e-134

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