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The effect of church tax on church membership

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Author Info

  • Teemu Lyytikäinen
  • Torsten Santavirta

    ()

Abstract

In this study, we examine the effect of church tax on the church membership decision using Finnish data. We present both descriptive statistics from an opting-out website and econometric evidence exploiting the panel structure of a large individual-level data set. Our descriptive analysis shows that opting out is concentrated towards the last days of the year, i.e., the last chance to avoid paying church tax for the entire coming year. Our econometric evidence suggests that the average effect of tax incentives for the whole population is both statistically and economically significant. A 1 standard deviation increase in church tax leads to between 0.5 and 1 percentage point decline in the likelihood of church membership. In addition, we find that church membership dropped substantially when a law change made opting out significantly easier. This finding suggests that transaction costs play an important role in the membership decision. Copyright Springer-Verlag 2013

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Bibliographic Info

Article provided by Springer in its journal Journal of Population Economics.

Volume (Year): 26 (2013)
Issue (Month): 3 (July)
Pages: 1175-1193

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Handle: RePEc:spr:jopoec:v:26:y:2013:i:3:p:1175-1193

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Related research

Keywords: Church tax; Church membership; Transaction cost; H24; H31; Z12;

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References

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  1. Dehejia, Rajeev & DeLeire, Thomas & Luttmer, Erzo F. P., 2005. "Insuring Consumption and Happiness through Religious Organizations," Working Paper Series rwp05-047, Harvard University, John F. Kennedy School of Government.
  2. Laurence R. Iannaccone, 1998. "Corrigenda [Introduction to the Economics of Religion]," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1941-1941, December.
  3. Jonathan Gruber, 2004. "Pay or Pray? The Impact of Charitable Subsidies on Religious Attendance," NBER Working Papers 10374, National Bureau of Economic Research, Inc.
  4. Laurence R. Iannaccone, 1998. "Introduction to the Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1465-1495, September.
  5. Brigitte C. Madrian & Dennis F. Shea, 2001. "THE POWER OF SUGGESTION: INERTIA IN 401(k) PARTICIPATION AND SAVINGS BEHAVIOR," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1149-1187, November.
  6. Jonathan Gruber & Daniel M. Hungerman, 2008. "The Church versus the Mall: What Happens When Religion Faces Increased Secular Competition?," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 831-862, 05.
  7. Gruber, Jonathan & Hungerman, Daniel M., 2007. "Faith-based charity and crowd-out during the great depression," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1043-1069, June.
  8. Gruber, Jonathan, 2004. "Pay or pray? The impact of charitable subsidies on religious attendance," Journal of Public Economics, Elsevier, vol. 88(12), pages 2635-2655, December.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The Demand Curve for Religion
    by Daniel Hamermesh in Freakonomics on 2012-11-20 15:05:12
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Cited by:
  1. Essi Eerola & Teemu Lyytikäinen, 2012. "On the role of public price information in housing markets," Working Papers 30, Government Institute for Economic Research Finland (VATT).

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