Joint with Tsuyoshi Goto (Chiba University), Youngrok Kim (University of Hyogo)

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 intention-to-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.

Discussion papers

• [Latest version] HIAS Discussion Paper Series (Hitotsubashi Institute for Advanced Study, Hitotsubashi University), September 2023. [Full-text link]
• Discussion Papers in Economics and Business (Graduate School of Economics, Osaka University), March 2023. [Full-text link]