elasticity {bunching}

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

bunchit

Examples

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