Church Tax Exemption and Structure of Religious Markets: A Dynamic Structural Analysis
2025-07-29
We study the effects of church tax exemptions on the structure of religious markets. Using the Brazilian experience as a showcase, we develop and estimate a dynamic entry model of religious organizations based on temple opening and closure in geographically isolated markets. Counterfactual simulations suggest that tax exemptions stimulated entry by all religions, but disproportionately benefited evangelical denominations: The evangelical share of temples increased by approximately 20 percentage points. By combining difference-in-differences estimates with model-based counterfactuals, we show that these policies also increased the support for evangelical caucus politicians, raising their vote share by 8 percent in the 2018 election. (JEL C73, D43, H25, O15, Z12)