Youngrok Kim

Abstract In this study, we estimate the tax-price elasticity of charitable giving and address the bias caused by the existence of unreported donations and self-selection regarding reporting on giving. To eliminate this bias, we propose a simple estimation method based on intention-to-treat analysis. Using our proposed method and the exogenous variation in tax incentives in the 2014 South Korean tax reform, we estimate the price elasticity to be −3.5 for the amount of total giving, which is more elastic than that in the standard results that do not account for unreported donations and self-selection. This result implies that the 2014 tax reform reduced the total amount of giving and that tax incentives should be expanded.

Abstract The study analyzes the correlation between South Korean taxpayers' perceptions of income inequality and their giving behavior, using 6 years of panel data from 2017 to 2022. It focuses on perceived income inequality, based on the assumption that individuals are more responsive to a subjective inequality index than to objective inequality measures. The results are as follows: First, consistent with the theoretical prediction, the higher the perceived income inequality, the more taxpayers give. This trend holds even when controlling for the Gini index. Second, higher‐income individuals who perceive income inequality as high donate more. Third, individuals who are more pessimistic about future income inequality donate more. Overall, the study concludes that subjective perceptions of income inequality increase the supply of individual public goods, consistent with theoretical predictions.