A Difference De-convolution Kernel Estimator and Its Application to Estimating the Impact of Tax Policy on the Demand for Private Health Insurances in Australia

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Conference Paper

Abstract

This paper is motivated by our attempt to answer an empirical question:
how private health insurance take-up in Australia is affected by the income
threshold at which the Medicare Levy Surcharge (MLS) kicks in. We propose
a new difference de-convolution kernel estimator for the location and
size of regression discontinuities. We also propose a bootstrapping procedure
for selecting the bandwidth and for estimating confidence bands for
the estimated function. Performance of the estimator is evaluated by Monte
Carlo simulations before it is applied to estimating the effect of the income
threshold of Medicare Levy Surcharge on the take-up of private health insurance
in Australia using contaminated data.

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