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  3. American Economic Journal: Microeconomics
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  5. Church Tax Exemption and Structure of Religious Markets: A Dynamic Structural Analysis

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

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

  • Raphael Corbi
  • Fabio Miessi Sanches
American Economic Journal: Microeconomics (Forthcoming)

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.

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