Saleh, Mohamed and Tirole, Jean (2021) Taxing identity: theory and evidence from early Islam. Econometrica, vol. 89 (n° 4). pp. 1881-1919.

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Abstract

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, quit, exodus or any other way of accommodating 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. The 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 comes in support of the identity-based model.