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Political Economy, Firm Survival and Entrepreneurship in Turkey: The Case of the Wealth Tax (1942)

Seven Ağır and Cihan Artunç

Abstract:
In 1942, the Republic of Turkey promulgated a controversial tax on personal wealth to finance mobilization of the army and curb inflation. The extraordinary tax was arbitrarily assessed and the burden fell disproportionately on non-Muslim minorities. The precise transformative effect of the tax on Turkey’s commercial life is not well understood. This article assembles a new dataset of firms operating in Istanbul to show the tax led to a dramatic rise on the liquidation of enterprises with non-Muslim ownership but no effect on Muslims. At the same time, the tax caused a sharp decline in the formation of new non-Muslim firms and a commensurate increase in the number of Muslim firms. The results show that the Wealth Tax forced the dissolution of otherwise productive, older firms and contributed to the further nationalization of the economy.

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2017

  • 17/08 Analyzing Wage Differentials by Fields of Study: Evidence from Turkey
    Antonio Di Paolo and Aysıt Tansel

  • 17/07 Political Economy, Firm Survival and Entrepreneurship in Turkey: The Case of the Wealth Tax (1942)
    Seven Ağır and Cihan Artunç

  • 17/06 An Integrated General Equilibrium Model for Evaluating Demographic, Social and Economic Impacts of Transport Policies
    Özhan Yılmaz and Ebru Voyvoda

  • 17/05 Labour Market Policies and the Informal Sector: A Segmented Labour Markets Analysis
    Dürdane Şirin Saracoğlu

  • 17/04 Trade and Commodity Taxes as Environmental Instruments in an Open Economy
    Onur A. Koska, Frank Stähler, and Onur Yeni

  • 17/03 Intertemporal CGE Analysis of Income Distribution in Turkey
    Aykut Mert Yakut and Ebru Voyvoda

  • 17/02 Asymmetric Exchange Rate Policy in Inflation Targeting Developing Countries
    Ahmet Benlialper, Hasan Cömert and Nadir Öcal

  • 17/01 Determinants of Obesity in Turkey: A Quantile Regression Analysis from a Developing Country
    Deniz Karaoğlan and Aysıt Tansel

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