notch_equation {bunching}

Notch Equation

Description

Defines indifference condition based on parametric utility function in notch setting. Used to parametrically solve for elasticity.

Usage

notch_equation(e, t0, t1, zstar, dzstar)

Arguments

e

elasticity.

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.

zstar

a numeric value for the the bunching point.

dzstar

The distance of the marginal buncher from zstar.

Value

util_diff returns the difference in utility between zstar and z_I in notch setting.

See Also

bunchit

elasticity

Examples

notch_equation(e = .04, t0 = 0, t1 = .2, zstar = 10000, dzstar = 50)