Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267230 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9997
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper studies the long-term effect of taxation on economic geography and development. We rely on a unique natural experiment in place during France's ancien régime: the salt tax. Introduced in the late 13th century and abrogated by the French Revolution in 1789, the salt tax was not uniformly levied across the French kingdom as its rate varied discontinuously in space. Using a series of rich and original historical data at regular time intervals and very fine spatial resolution since the fifteen century, we estimate a Spatial RDD model. We find that these exogenous tax rate differentials have had large effects on economic geography and development. These effects are, then, confirmed in a DiD analysis, that studies a very large time span (1400-1900 using regular intervals of 25 years) and documents the absence of pre-trends. Most of the effects can still be observed today in population density, firm density, and local average income.
Subjects: 
taxation
long-term
economic georgraphy
development
spatial discontinuity
salt tax
JEL: 
H20
N33
O23
J61
Document Type: 
Working Paper
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