Dynamic Bunching Estimation with Panel Data
MPRA Paper from University Library of Munich, Germany
Abstract An increasingly common technique for studying behavioral elasticities uses bunching estimation of the excess mass in a distribution around a price or policy threshold. This paper shows how serial dependence of the choice variable and extensive-margin responses may bias these estimates. It then proposes new bunching designs that take greater advantage of panel data to avoid these biases and estimate new parameters. Standard methods over-reject in simulations using household income data and over-estimate bunching in an application with charities. Designs exploiting panel data provide unbiased bunching estimates, improved heterogeneity analysis, and the ability to estimate extensive-margin responses and long-run effects.
Keywords: bunching; estimation; panel (search for similar items in EconPapers)
JEL-codes: C23 D92 H21 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:88647
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