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Tax-Price Elasticities of Charitable Giving and Selection of Declaration : Panel Study of South Korea

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  • KATO, Hiroki
  • GOTO, Tsuyoshi
  • KIM, Youngrok

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 intentionto- 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.

Suggested Citation

  • KATO, Hiroki & GOTO, Tsuyoshi & KIM, Youngrok, 2023. "Tax-Price Elasticities of Charitable Giving and Selection of Declaration : Panel Study of South Korea," Discussion paper series HIAS-E-134, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    • Handle: RePEc:hit:hiasdp:hias-e-134
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    References listed on IDEAS

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    More about this item

    Keywords

    Charitable giving; Tax incentives; Price elasticity; Selection; Declaration;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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