Econometrica: Jul, 2021, Volume 89, Issue 4

Taxing Identity: Theory and Evidence from Early Islam

https://doi.org/10.3982/ECTA17265
p. 1881-1919

Mohamed Saleh, Jean Tirole

A ruler who does not identify with a social group, whether on religious, ethnic, cultural, or socioeconomic grounds, is confronted with a trade‐off between taking advantage of the out‐group population's eagerness to maintain its identity and inducing it to “comply” (conversion, quitting, exodus, or any other way to accommodate the ruler's own identity). This paper first nests economists' extraction model, in which rulers are revenue‐maximizers, within a more general identity‐based model, in which rulers care also about inducing people to lose their identity, both in a static and an evolving environment. This paper then constructs novel data sources to test the implications of both models in the context of Egypt's conversion to Islam between 641 and 1170. The evidence supports the identity‐based model.

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