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Bunching

Author

Listed:
  • Henrik Jacobsen Kleven

    (Department of Economics, London School of Economics, London WC2A 2AE, United Kingdom)

Abstract

Recent years have seen a surge of applied work using bunching approaches, a development that is closely linked to the increased availability of administrative data. These approaches exploit the incentives for bunching created by discontinuities in the slope of choice sets (kinks) or in the level of choice sets (notches) to study the behavior of individuals and firms. Although the bunching approach was originally developed in the context of taxation, it is beginning to find applications in many other areas, such as social security, social insurance, welfare programs, education, regulation, private sector prices, and reference-dependent preferences. This review provides a guide to bunching estimation, discusses its strengths and weaknesses, surveys a range of applications across fields, and considers reasons for the ubiquity of kinks and notches.

Suggested Citation

  • Henrik Jacobsen Kleven, 2016. "Bunching," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 435-464, October.
  • Handle: RePEc:anr:reveco:v:8:y:2016:p:435-464
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    File URL: http://www.annualreviews.org/doi/10.1146/annurev-economics-080315-015234
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    Citations

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    Cited by:

    1. Katrine Jakobsen & Kristian Jakobsen & Henrik Kleven & Gabriel Zucman, 2020. "Wealth Taxation and Wealth Accumulation: Theory and Evidence From Denmark," The Quarterly Journal of Economics, Oxford University Press, vol. 135(1), pages 329-388.
    2. Marx, Benjamin M., 2018. "Dynamic Bunching Estimation with Panel Data," MPRA Paper 88647, University Library of Munich, Germany.

    More about this item

    Keywords

    bunching estimation; kinks; notches; structural parameters; optimization frictions; reference dependence;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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