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

Ağır M. S. , Artunc C.

JOURNAL OF ECONOMIC HISTORY, vol.79, pp.201-243, 2019 (Peer-Reviewed Journal) identifier identifier

  • Publication Type: Article / Article
  • Volume: 79
  • Publication Date: 2019
  • Doi Number: 10.1017/s0022050718000724
  • Journal Indexes: Social Sciences Citation Index, Scopus
  • Page Numbers: pp.201-243


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.