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The Wealth Tax of 1942 and the Disappearance of Non-Muslim Enterprises in Turkey

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  • Ağır, Seven
  • Artunç, Cihan

Abstract

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.

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  • Ağır, Seven & Artunç, Cihan, 2019. "The Wealth Tax of 1942 and the Disappearance of Non-Muslim Enterprises in Turkey," The Journal of Economic History, Cambridge University Press, vol. 79(1), pages 201-243, March.
    • Handle: RePEc:cup:jechis:v:79:y:2019:i:01:p:201-243_00
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    Cited by:

    1. Guinnane, Timothy W. & Schneebacher, Jakob, 2020. "Enterprise form: Theory and history," Explorations in Economic History, Elsevier, vol. 76(C).
    2. Mohamed Saleh & Jean Tirole, 2021. "Taxing Identity: Theory and Evidence From Early Islam," Econometrica, Econometric Society, vol. 89(4), pages 1881-1919, July.
    3. Seven Ağır, 2023. "The ‘Missing Middle’: A Historical-Institutional Perspective on the Stagnation of Small and Medium Enterprises in Turkey," ERC Working Papers 2305, ERC - Economic Research Center, Middle East Technical University, revised Nov 2023.

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