American Economic Review Vol. 112 No. 1 2022
Employment Structure and the Rise of the Modern Tax System
open access
Abstract
This paper builds a new microdatabase that covers 100 countries at all income levels and long-run time series in the United States (1870–2010) and Mexico ( 1960–2010) to document how the modern tax system arises over development. I establish a new set of stylized facts, which show that the income tax exemption threshold decreases in the income distribution as a country develops, tracking growth in the employee share of employment that occurs gradually further down the income distribution. Additional evidence supports the interpretation that the rise in third-party covered income through increases in employee share drives expansions of the income tax base over development.
- DOI
- 10.1257/aer.20191528
- Volume
- 112
- Issue
- 1
- Pages
- 213-234
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref