elas_equalizer: Using elasticity to calculating distance between utility at...

In bunchr: Analyze Bunching in a Kink or Notch Setting

Description

Given an elasticity, a budget set, and the earnings of the marginal buncher, calculate the utility at notch point and at marginal buncher's earning, and return the absolute difference. Equating these two utilities helps find the elasticity of the marginal buncher. See equations (3) and (4) at Kelven and Waseem (2013)

Usage

elas_equalizer(elas, t1, t2, Tax, zstar, delta_zed, binw)

Arguments

elas	elasticity of earnings w.r.t. net-of-tax rate
t1	Tax rate before notch/kink
t2	Tax rate after notch/kink
Tax	Height of notch (zero for pure kink)
zstar	Place of notch/kink (critical earning point)
delta_zed	The notch size
binw	Bin width

Value

Absolute value of utility at zstar+delta_zed minus utility at kink/notch point.

References

Kleven, H. and Waseem, Mazhar (2013) Using notches to uncover optimization frictions and structural elasticities: Theory and evidence from Pakistan, The Quarterly Journal of Economics 128(2)

Examples

elas_equalizer(0.2, 0.1, 0.2, 100, 1000, 200, 20)

bunchr documentation built on May 2, 2019, 8:53 a.m.