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IEB17-10_Neisser.pdf (1.28 MB)

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Working paper

Publication date

2017

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cc-by-nc-nd, (c) Neisser, 2017
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/117524

The elasticity of taxable income: A meta-regression analysis

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Abstract

The elasticities of taxable (ETI) and broad income (EBI) are key parameters in optimal tax and welfare analysis. To examine the large variation in estimates found in the literature, I conduct a comprehensive meta-regression analysis of elasticities that measure behavioral responses to income taxation using information from 51 different studies containing 1,420 estimates. I find that heterogeneity in reported estimates is driven by regression techniques, sample restrictions and variations across countries and time. Moreover, I provide descriptive evidence of the correlation between contextual factors and the magnitude of an elasticity estimate. Overall, the study confirms the fact that the ETI itself is endogenous to the underlying tax system. I also document that selective reporting bias is prevalent in the literature. The direction of reporting bias depends on whether or not deductions are included in the tax base.

Subject

Estimació de la base imposable, Anàlisi de regressió, Impostos sobre el patrimoni

Subject (English)

Regression analysis, Property tax

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IEB (Institut d’Economia de Barcelona) – Working Papers

Citation

NEISSER, Carina. The elasticity of taxable income: A meta-regression analysis. IEB Working Paper 2017/10. [consulted: 12 of August of 2026]. Available at: https://hdl.handle.net/2445/117524

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