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Nicky Lee Grant
''Correlated Random Effects Quantile Estimation of the Tax-Price Elasticity of Charitable Donations''
( 2016, Vol. 36 No.3 )
This paper provides quantile estimates of the tax-price elasticity of charitable donations controlling for unobserved heterogeneity. Utilising the Correlated Random Effects Quantile estimator of Bache, Dahl & Kristensen (2013) it is found that the size of the price elasticity is decreasing in the size of donation with very large donors being largely unresponsive to tax incentives for giving. We provide evidence that cross sectional quantiles estimates of the price elasticity not accounting for unobserved heterogeneity suffer a substantial downward bias for those with small to mid-level donations.
Keywords: Price Elasticity, Charitable Giving, Quantile Regression, Correlated Random Effects.
JEL: H2 - Taxation, Subsidies, and Revenue: General
Manuscript Received : Apr 30 2016 Manuscript Accepted : Sep 11 2016

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