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Did Protestantism Promote Economic Prosperity via Higher Human Capital?

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  • Jeremy Edwards

Abstract

This paper investigates the Becker-Woessmann (2009) argument that Protestants were more prosperous in nineteenth-century Prussia because they were more literate, a version of the Weber thesis, and shows that it cannot be sustained. The econometric analysis on which Becker and Woessman based their argument is fundamentally flawed, because their instrumental variable does not satisfy the exclusion restriction. When an appropriate instrumental-variable specification is used, the evidence from nineteenth-century Prussia rejects the human-capital version of the Weber thesis put forward by Becker and Woessmann.

Suggested Citation

  • Jeremy Edwards, 2017. "Did Protestantism Promote Economic Prosperity via Higher Human Capital?," CESifo Working Paper Series 6646, CESifo.
    • Handle: RePEc:ces:ceswps:_6646
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6646.pdf
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    References listed on IDEAS

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    1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    2. Sascha O. Becker & Ludger Woessmann, 2009. "Was Weber Wrong? A Human Capital Theory of Protestant Economic History," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 531-596.
    3. Jean-Marie Dufour, 2003. "Identification, weak instruments, and statistical inference in econometrics," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 767-808, November.
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    5. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
    6. Sanderson, Eleanor & Windmeijer, Frank, 2016. "A weak instrument F-test in linear IV models with multiple endogenous variables," Journal of Econometrics, Elsevier, vol. 190(2), pages 212-221.
    7. Keith Finlay & Leandro Magnusson & Mark E Schaffer, 2013. "WEAKIV: Stata module to perform weak-instrument-robust tests and confidence intervals for instrumental-variable (IV) estimation of linear, probit and tobit models," Statistical Software Components S457684, Boston College Department of Economics, revised 18 Oct 2016.
    8. Sascha O. Becker & Francesco Cinnirella & Erik Hornung & Ludger Woessmann, 2014. "iPEHD--The ifo Prussian Economic History Database," Historical Methods: A Journal of Quantitative and Interdisciplinary History, Taylor & Francis Journals, vol. 47(2), pages 57-66, June.
    9. repec:ecj:econjl:v:122:y:2012:i::p:502-531 is not listed on IDEAS
    10. Davide Cantoni, 2012. "Adopting a New Religion: the Case of Protestantism in 16th Century Germany," Economic Journal, Royal Economic Society, vol. 122(560), pages 502-531, May.
    11. Ogilvie,Sheilagh & Cerman,Markus (ed.), 1996. "European Proto-Industrialization," Cambridge Books, Cambridge University Press, number 9780521497381.
    12. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    13. Frank Kleibergen, 2005. "Testing Parameters in GMM Without Assuming that They Are Identified," Econometrica, Econometric Society, vol. 73(4), pages 1103-1123, July.
    14. Edwards, Jeremy, 2018. "A replication of "Education and catch-up in the industrial revolution" (American Economic Journal: Macroeconomics, 2011)," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-33.
    15. Donald W. K. Andrews & Marcelo J. Moreira & James H. Stock, 2006. "Optimal Two-Sided Invariant Similar Tests for Instrumental Variables Regression," Econometrica, Econometric Society, vol. 74(3), pages 715-752, May.
    16. Ogilvie,Sheilagh & Cerman,Markus (ed.), 1996. "European Proto-Industrialization," Cambridge Books, Cambridge University Press, number 9780521497602.
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    Cited by:

    1. Michael Wyrwich, 2018. "The effect of being Protestant on entrepreneurial choice," Jena Economics Research Papers 2018-010, Friedrich-Schiller-University Jena.

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    More about this item

    Keywords

    Protestantism; Weber thesis; human capital; instrumental variables;
    All these keywords.

    JEL classification:

    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I20 - Health, Education, and Welfare - - Education - - - General
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913

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    1. Did Protestantism promote prosperity via higher human capital? Replicating the Becker–Woessmann (2009) results (Journal of Applied Econometrics forthcoming) in ReplicationWiki

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