Discussion paper

DP14599 The Ability Gradient in Bunching

We analyze the relationship between cognitive ability and bunching in the context of a large and salient kink point of the Swedish income tax schedule. Using population-wide register data from the Swedish military enlistment and administrative tax records, we find that high-ability individuals bunch more than low-ability individuals. This ability gradient is stronger for the self-employed, but is also present among wage earners. We also use high-school GPA and math grades to analyze gender differences, finding a stronger ability gradient among men.


Bastani, S and D Waldenström (2020), ‘DP14599 The Ability Gradient in Bunching‘, CEPR Discussion Paper No. 14599. CEPR Press, Paris & London. https://cepr.org/publications/dp14599