elasticity {bunching} | R Documentation |

## Elasticity

### Description

Estimate elasticity from single normalized bunching observation.

### Usage

```
elasticity(
beta,
binwidth,
zstar,
t0,
t1,
notch = FALSE,
e_parametric = FALSE,
e_parametric_lb = 1e-04,
e_parametric_ub = 3
)
```

### Arguments

`beta` |
normalized excess mass. |

`binwidth` |
a numeric value for the width of each bin. |

`zstar` |
a numeric value for the the bunching point. |

`t0` |
numeric value setting the marginal (average) tax rate below zstar in a kink (notch) setting. |

`t1` |
numeric value setting the marginal (average) tax rate above zstar in a kink (notch) setting. |

`notch` |
whether analysis is for a kink or notch. Default is FALSE (kink). |

`e_parametric` |
whether to estimate elasticity using parametric specification (quasi-linear and iso-elastic utility function). Default is FALSE (which estimates reduced-form approximation). |

`e_parametric_lb` |
lower bound for elasticity estimate's solution using parametric specification in notch setting. Default is 1e-04. |

`e_parametric_ub` |
upper bound for elasticity estimate's solution using parametric specification in notch setting. Default is 3. |

### Value

`elasticity`

returns the estimated elasticity. By default, this is based on the reduced-form approximation. To use the parametric equivalent, set e_parametric to TRUE.

### See Also

### Examples

```
elasticity(beta = 2, binwidth = 50, zstar = 10000, t0 = 0, t1 = 0.2)
```

*bunching*version 0.8.6 Index]