Distinguishing Transitory and Permanent Price Elasticities of Charitable Giving with Pre-Announced Changes in Tax Law

Jon Bakija

No 2000-06, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: This paper develops and applies a new estimation technique for distinguishing transitory and permanent price and income elasticities of charitable giving using panel data. Twelve-year individual averages of income and deductions are combined with information on legislated changes in tax schedules, to construct instruments for permanent price and income variation. Unlike the previous literature, pre-announced changes in tax law are used to identify transitory variation, and fixed-effects are used to control for unobserved heterogeneity. The timing of giving is found to be significantly more responsive to tax incentives than is the long-run level of giving.

Keywords: Charitable Donations; Incentive Effects of Taxation; Estimation; Empirical Analysis; Intertemporal Consumer Choice (search for similar items in EconPapers)
JEL-codes: D12 D91 H24 H31 (search for similar items in EconPapers)
Date: 2000-10
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:wil:wileco:2000-06

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