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Cultural barriers to market integration: Evidence from 19th century Austria

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  • Walker, Sarah

Abstract

I explore the relationship between culture and market integration using data from 19th century Austria and find that religious, not ethnic, differences between regions increase price differentials for grains. I argue that an important mechanism is cultural patronage in the placement of transportation infrastructure. The results show that railroad construction was more intensive between religiously similar places and that religious diversity within regions is negatively correlated with road and rail density. As a secondary mechanism, I argue that regions with more religious diversity enjoyed greater competition in agricultural markets after the elimination of religious discrimination in land tenure institutions. The results support this hypothesis, showing that within regions, religious diversity is negatively correlated with grain prices. The findings highlight the importance of culture and institutions in economic development and are relevant for culturally diverse regional economies today.

Suggested Citation

  • Walker, Sarah, 2018. "Cultural barriers to market integration: Evidence from 19th century Austria," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1122-1145.
  • Handle: RePEc:eee:jcecon:v:46:y:2018:i:4:p:1122-1145
    DOI: 10.1016/j.jce.2018.05.001
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    More about this item

    Keywords

    Market integration; Culture; Institutions; Railroads; Habsburg;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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