Employment Structure and the Rise of the Modern Tax System

Anders Jensen

American Economic Review, 2022, vol. 112, issue 1, 213-34

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.

JEL-codes: D31 H23 H24 H71 J22 J23 N40 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (27)

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DOI: 10.1257/aer.20191528

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