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The effect of church tax on church membership

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  • Teemu Lyytikäinen
  • Torsten Santavirta

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. Copyright Springer-Verlag 2013

Suggested Citation

  • Teemu Lyytikäinen & Torsten Santavirta, 2013. "The effect of church tax on church membership," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1175-1193, July.
    • Handle: RePEc:spr:jopoec:v:26:y:2013:i:3:p:1175-1193
    DOI: 10.1007/s00148-012-0431-y
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Demand Curve for Religion
      by Daniel Hamermesh in Freakonomics on 2012-11-20 21:05:12

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    Cited by:

    1. Bittschi, Benjamin & Borgloh, Sarah & Wigger, Berthold, 2015. "Secularization, tax policy and prosocial behavior," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113065, Verein für Socialpolitik / German Economic Association.
    2. Benjamin Bittschi & Sarah Borgloh & Berthold U. Wigger, 2020. "Philanthropy in a Secular Society," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 176(4), pages 640-664.
    3. Eerola, Essi & Lyytikäinen, Teemu, 2015. "On the role of public price information in housing markets," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 74-84.

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    More about this item

    Keywords

    Church tax; Church membership; Transaction cost; H24; H31; Z12;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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