Seven Ağır, Cihan Artunç
The Journal of Economic History, 79/1 (2019), p. 201-243.
Type: Articles in scientific journals

Turkey imposed a controversial tax on wealth to finance the army in 1942. This tax was arbitrarily assessed and fell disproportionately on non-Muslim minorities. We study the heterogeneous impact of this tax on firms by assembling a new dataset of all enterprises in Istanbul between 1926 and 1950. We find that the tax led to the liquidation of non-Muslim-owned firms, which were older and more productive, reduced the formation of new businesses with non-Muslim owners, and replaced them with frailer Muslim-owned startups. The tax helped “nationalize” the Turkish economy, but had negative implications for productivity and growth.

Free access to this article is available until May 9, 2019.

https://doi.org/10.1017/S0022050718000724