bunch_count_fraction.ado

This code estimates the magnitude of bunching at a specific point in a histogram. Jake Mortenson and I use this in our 2020 AEJ: Policy article "Bunching to Maximize Tax Credits: Evidence from Kinks in the U.S. Tax Schedule." The code is based on a similar .ado file provided by Chetty, Olsen, Friedman and Pistaferri for their 2011 QJE paper "Adjustment Costs, Firm Responses, and Micro vs. Macro Labor Supply Elasticities: Evidence from Danish Tax Records." Our code extends theirs, allowing the user to input a fraction between zero and one that dictates the portion of bunching to be reallocated when generating the counterfactual histogram.