IESET.
Hypotheses·growth·reagan_tax_cuts_growth_effect

Reagan's 1981–1986 marginal-tax-rate reductions produced measurable labour-supply response at the top of the distribution, with output growth exceeding the pre-reform trend.

PARTIALengine/runs/reagan_tax_cuts_growth_effect

PARTIAL — shape=TWFE, coef=+0.006685, p=0.827 (above α=0.10)

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The evidence is suggestive but not decisive. shape=TWFE, coef=+0.006685, p=0.827 (above α=0.10)

why it matters

Growth claims can look convincing in single success stories. This test asks whether the pattern survives a broader comparison.

how the test works

It compares 8 country or place units from 1970 to 1995, using a event study design, with fixed effects for year.

what was measured
What changed
  • Post reagan tax cut indicator
What we checked
  • Log real income pc
  • Log real income us
  • Top 1pct income share
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

0 input datasets, 0 unresolved missing series, provenance status: no input vintages recorded.

Results

engine/runs/reagan_tax_cuts_growth_effect
1007550250197019831995USAGBRDEUFRAITACANJPN
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show log_real_gdp_pc across 8 sampled countries over 1970–1995.
The shapes above are stylised — none of the lines are real data.
Placeholder for reagan_tax_cuts_growth_effect. Published chart will be generated from engine/runs/reagan_tax_cuts_growth_effect/chart_data.json.

Who has skin in the game — schools predicting on this

2 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Chicago School Monetarismwins if REFUTEDpartial/no-call⇄Classical Liberalwins if REFUTEDpartial/no-call⇄

Pre-registration

pre-registered
first-spec commit bae09ab · 2026-04-29T22:09:42Z
run generated · 2026-05-15T20:30:41Z

Reagan's 1981–1986 marginal-tax-rate reductions produced measurable labour-supply response at the top of the distribution, with output growth exceeding the pre-reform trend.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is considered falsified if the pre-registered empirical test shows the opposite direction of the claim at conventional significance (p > 0.10), or if the primary outcome measure moves less than 10% in the claimed direction across the sample. Exact thresholds will be pinned in the variables and estimator blocks when this stub is promoted from draft.

formal test & threshold
test:      Event-study around 1981 ERTA and 1986 TRA using IRS-SOI panel, year FE, state-clustered SE; outcome top-decile labour income elasticity of taxable income; falsified if estimated ETI below 0.2 at p<0.10.

Method

Template
event_study
Fixed effects
year
Clustering
state
Sample
8 countries · 1970 – 1995
Evidence type
associational

Event study around the 1981 Reagan tax cuts and the 1986 reform using US individual-income-tax-return microdata (or aggregated state-level panel) to estimate top-of-distribution labour-supply elasticity and growth response. Tests whether the post-reform output trend exceeds the pre-reform trend at conventional significance.

Data

VariableSourceTransform
log_real_gdp_pc
outcome
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
log_real_gdp_us
outcome
fred:GDPC1tier 1
log
top_1pct_income_share
outcome
world_bank_wdi:SI.POV.GINItier 2
level
employment_rate
outcome
fred:CIVPARTtier 1
level
top_marginal_income_tax_rate
outcome
wid:tax_top_ratetier 3
level
post_reagan_tax_cut_indicator
treatment
constructed:indicator = 1 for USA, year >= 1982 (ERTA effective)tier 5
indicator
log_population
control
world_bank_wdi:SP.POP.TOTLtier 2
log
cpi_inflation
control
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — reagan_tax_cuts_growth_effect

Verdict: PARTIAL — shape=TWFE, coef=+0.006685, p=0.827 (above α=0.10)

Pre-registration

  • Claim: Reagan's 1981–1986 marginal-tax-rate reductions produced measurable labour-supply response at the top of the distribution, with output growth exceeding the pre-reform trend.
  • Falsification rule: The hypothesis is considered falsified if the pre-registered empirical test shows the opposite direction of the claim at conventional significance (p > 0.10), or if the primary outcome measure moves less than 10% in the claimed direction across the sample. Exact thresholds will be pinned in the variables and estimator blocks when this stub is promoted from draft.
  • Falsification test: Event-study around 1981 ERTA and 1986 TRA using IRS-SOI panel, year FE, state-clustered SE; outcome top-decile labour income elasticity of taxable income; falsified if estimated ETI below 0.2 at p<0.10.
  • Event year: 1981

Estimate

  • shape: multi_country_twfe
  • coefficient: 0.006684850439729976
  • std_error: 0.03058644307184611
  • p_value: 0.8272550423945264
  • n_obs: 208
  • n_countries: 8
  • r_squared_within: -0.2872827219273122
  • method: linearmodels.PanelOLS (TWFE, country-clustered)
  • dropped_controls_due_to_overlap: []

Variables resolved

  • world_bank_wdi:NY.GDP.PCAP.KD → log_real_gdp_pc (outcome, publisher=world_bank_wdi, n=14066)
  • fred:GDPC1 → log_real_gdp_us (outcome, publisher=fred, n=80)
  • world_bank_wdi:SI.POV.GINI → top_1pct_income_share (outcome, publisher=world_bank_wdi, n=2430)
  • fred:CIVPART → employment_rate (outcome, publisher=fred, n=79)
  • wid:tax_top_rate → top_marginal_income_tax_rate (outcome, publisher=owid, n=590)
  • constructed: indicator = 1 for USA, year >= 1982 (ERTA effective) → post_reagan_tax_cut_indicator (treatment, publisher=constructed, n=208)
  • world_bank_wdi:SP.POP.TOTL → log_population (controls, publisher=world_bank_wdi, n=16935)
  • world_bank_wdi:FP.CPI.TOTL.ZG → cpi_inflation (controls, publisher=world_bank_wdi, n=9066)

Generated by scripts/run_event_study.py at 2026-05-15T20:30:41+00:00

Notes

Seeded from a classical-liberal/supply-side claim that Reagan 1981-86 marginal-rate cuts produced top-of-distribution labour-supply response and above-trend output. Event study; human review needed to disentangle from Volcker disinflation and 1986 base-broadening.

Authored framework. Read the transparency note.