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The effect of church tax on church membership

Lyytikainen, Teemu and Santavirta, Torsten (2013) The effect of church tax on church membership. Journal of Population Economics, 26 (3). pp. 1175-1193. ISSN 1432-1475

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Identification Number: 10.1007/s00148-012-0431-y

Abstract

In this study, we examine the effect of church tax on the church membership decision using Finnish data. We present both descriptive statistics from an opting-out website and econometric evidence exploiting the panel structure of a large individual-level data set. Our descriptive analysis shows that opting out is concentrated towards the last days of the year, i.e., the last chance to avoid paying church tax for the entire coming year. Our econometric evidence suggests that the average effect of tax incentives for the whole population is both statistically and economically significant. A 1 standard deviation increase in church tax leads to between 0.5 and 1 percentage point decline in the likelihood of church membership. In addition, we find that church membership dropped substantially when a law change made opting out significantly easier. This finding suggests that transaction costs play an important role in the membership decision.

Item Type: Article
Official URL: http://www.springerlink.com/content/0933-1433/
Additional Information: © 2012 Springer-Verlag
Subjects: B Philosophy. Psychology. Religion > BR Christianity
H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
Sets: Research centres and groups > Spatial Economics Research Centre
Date Deposited: 23 Jul 2012 14:45
Last Modified: 26 Jun 2014 10:35
Funders: Yrjö Jahnsson Foundation, Eemil Aaltonen Foundation
URI: http://eprints.lse.ac.uk/id/eprint/44918

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