IESET.
Hypotheses·growth·top_marginal_rate_growth_tradeoff

Progressive income-tax marginal rates (up to roughly 70% top rate) have been compatible with strong growth in post-war US 1945-1980 and Nordics, falsifying extreme-Laffer-curve positions.

PARTIALengine/runs/top_marginal_rate_growth_tradeoff

PARTIAL — coef=+0.0006927, p=0.558 (above α=0.05); direction inconclusive

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. coef=+0.0006927, p=0.558 (above α=0.05); direction inconclusive

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 16 country or place units from 1945 to 1980, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Top marginal income tax rate
What we checked
  • Log income pc long run
  • Real income growth
  • Productivity index
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

No evidence packet has been generated yet.

Results

engine/runs/top_marginal_rate_growth_tradeoff
1007550250194519631980USAGBRDEUFRAITANLDBEL
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show log_gdp_pc_long_run across 16 sampled countries over 1945–1980.
The shapes above are stylised — none of the lines are real data.
Placeholder for top_marginal_rate_growth_tradeoff. Published chart will be generated from engine/runs/top_marginal_rate_growth_tradeoff/chart_data.json.

Who has skin in the game — schools predicting on this

1 school 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.

Social Democraticwins if SUPPORTEDpartial/no-call

Pre-registration

pre-registered
first-spec commit bae09ab · 2026-04-29T22:09:42Z
run generated · 2026-06-29T17:53:04Z

Progressive income-tax marginal rates (up to roughly 70% top rate) have been compatible with strong growth in post-war US 1945-1980 and Nordics, falsifying extreme-Laffer-curve positions.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

PRIMARY: the hypothesis is SUPPORTED if the top-marginal-income-tax-rate coefficient on real GDP per-capita growth is not significantly negative at p<0.05 and is not economically large in the negative direction. It is REFUTED if the coefficient is below -0.005 annual growth points per one-percentage-point top-rate increase at p<0.05, or if high-rate observations above 70% show a materially lower growth path after country and year fixed effects. Otherwise the result is PARTIAL because compatibility is not equivalent to a positive growth effect.

formal test & threshold
test:      Panel FE of real GDP per capita growth on top-marginal-tax-rate level, advanced-economy panel 1945-1980, country and year FE; falsified if coefficient is significantly negative at p<0.05 or |coefficient|>0.5.

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
16 countries · 1945 – 1980
Evidence type
associational

Cross-country panel of US and Nordic economies 1945-1980 of real GDP per capita growth on top-marginal-tax-rate level. Tests whether high-rate periods (>=70% top rate) coexisted with strong growth, contradicting extreme-Laffer-curve predictions.

Data

VariableSourceTransform
log_gdp_pc_long_run
outcome
maddison:gdppc_ppptier 3
log
real_gdp_growth
outcome
world_bank_wdi:NY.GDP.MKTP.KD.ZGtier 2
level
tfp_index
outcome
pwt:rtfpnatier 3
level
top_marginal_income_tax_rate
treatment
wid:tax_top_ratetier 3
owid:top-income-taxtier 2
level
log_initial_gdp_pc
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
log_population
control
world_bank_wdi:SP.POP.TOTLtier 2
log
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
gross_capital_formation_pct_gdp
control
world_bank_wdi:NE.GDI.TOTL.ZStier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — top_marginal_rate_growth_tradeoff

Verdict: PARTIAL — coef=+0.0006927, p=0.558 (above α=0.05); direction inconclusive

Pre-registration

  • Claim: Progressive income-tax marginal rates (up to roughly 70% top rate) have been compatible with strong growth in post-war US 1945-1980 and Nordics, falsifying extreme-Laffer-curve positions.
  • Falsification rule: PRIMARY: the hypothesis is SUPPORTED if the top-marginal-income-tax-rate coefficient on real GDP per-capita growth is not significantly negative at p<0.05 and is not economically large in the negative direction. It is REFUTED if the coefficient is below -0.005 annual growth points per one-percentage-point top-rate increase at p<0.05, or if high-rate observations above 70% show a materially lower growth path after country and year fixed effects. Otherwise the result is PARTIAL because compatibility is not equivalent to a positive growth effect.
  • Falsification test: Panel FE of real GDP per capita growth on top-marginal-tax-rate level, advanced-economy panel 1945-1980, country and year FE; falsified if coefficient is significantly negative at p<0.05 or |coefficient|>0.5.

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +0.0006927
  • Std error: 0.001157
  • p-value: 0.558
  • Observations: 43, countries: 3
  • Within R²: 0.983
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • maddison:gdppc_ppp → log_gdp_pc_long_run (outcome, publisher=maddison, n=19706)
  • world_bank_wdi:NY.GDP.MKTP.KD.ZG → real_gdp_growth (outcome, publisher=world_bank_wdi, n=13897)
  • pwt:rtfpna → tfp_index (outcome, publisher=pwt, n=6407)
  • wid:tax_top_rate; OWID has owid:top-income-tax as fallback → top_marginal_income_tax_rate (treatment, publisher=owid, n=590)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_initial_gdp_pc (controls, publisher=world_bank_wdi, n=12104)
  • world_bank_wdi:SP.POP.TOTL → log_population (controls, publisher=world_bank_wdi, n=14447)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:NE.GDI.TOTL.ZS → gross_capital_formation_pct_gdp (controls, publisher=world_bank_wdi, n=10428)

Generated by scripts/run_panel_fe.py at 2026-06-29T17:53:04+00:00

Notes

Seeded from a social-democratic claim that high (~70%) marginal income-tax rates have coexisted with strong post-war growth in the US and Nordics, falsifying extreme-Laffer positions. Cross-country panel; human review needed because rate levels endogenous to growth performance.

Authored framework. Read the transparency note.