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Church Tax Exemption and Structure of Religious Markets: a Dynamic Structural Analysis

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  • Raphael Corbi
  • Fabio Miessi Sanches

Abstract

We investigate how church tax-exemption policies affect the structure of religion markets. Using the Brazilian experience as a showcase, we build and estimate a dynamic game of Church entry from temple entry/exit data in isolated markets. Counterfactuals show that tax-exemptions encouraged the opening of temples of all religions, but Evangelical churches collectively grew more than the Catholic Church. The share of Evangelical temples increased by approximately 20 p.p. as a result. By combining DiD estimates with our counterfactuals, we find that tax-exemption policies increased the vote share of politicians affiliated with the Evangelical caucus by 8% in the 2018 elections.

Suggested Citation

  • Raphael Corbi & Fabio Miessi Sanches, 2024. "Church Tax Exemption and Structure of Religious Markets: a Dynamic Structural Analysis," Working Papers, Department of Economics 2024_31, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2024wpecon31
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    More about this item

    Keywords

    Religion; Tax; Dynamic Oligopoly; Dynamic Game Estimation;
    All these keywords.

    JEL classification:

    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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