//I'm new here, sorry if the question is stupid and/or badly specified :/ Please help me what should I clarify
I'm trying to do a variation of bunching (manipulating with wage levels to avoid higher tax rate/exam scores to pass etc) estimation by flexible polynomial OLS regression based on Kleven and Waseem 2013 (the model in question is on p. 21-23). To investigate the extent of bunching around the thresholds they first fitted a flexible polynomial (y=b0+b1*x+b2^2+b3^3+b4^4+b5^5...) to the empirical density of wage/points that excluded observations from the area around the threshold (that's a counter-factual) and then they repeated it, this time including the suspicious area (with dummy variables).
Here's a picture to get the idea density comparison Here's the equation and a description the regression equation + model description
I'm supposed to do that in Stata and I haven't been able to find a way how to make a flexible polynom there.
Does anybody have an idea by any chance please?
Comment