Using a large administrative dataset from Canada we estimate that the tax price elasticity of charitable donations is -1.9. When we allow for heterogeneity of this parameter across the income distribution, we observe a large elasticity at the bottom...
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Using a large administrative dataset from Canada we estimate that the tax price elasticity of charitable donations is -1.9. When we allow for heterogeneity of this parameter across the income distribution, we observe a large elasticity at the bottom of the distribution between -3 and -4, and an elasticity closer to -1 at the top. We find evidence that the response to tax price occurs on both the intensive margin of how much to give, and the extensive margin of whether to give or not