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Religious Competition and Reallocation: the Political Economy of Secularization in the Protestant Reformation

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  • Davide Cantoni
  • Jeremiah Dittmar
  • Noam Yuchtman

Abstract

Using novel microdata, we document an important, unintended consequence of the Protestant Reformation: a reallocation of resources from religious to secular purposes. To understand this process, we propose a conceptual framework in which the introduction of religious competition shifts political markets where religious authorities provide legitimacy to rulers in exchange for control over resources. Consistent with our framework, religious competition changed the balance of power between secular and religious elites: secular authorities acquired enormous amounts of wealth from monasteries closed during the Reformation, particularly in Protestant regions. This transfer of resources had significant consequences. First, it shifted the allocation of upper-tail human capital. Graduates of Protestant universities increasingly took secular, especially administrative, occupations. Protestant university students increasingly studied secular subjects, especially degrees that prepared students for public sector jobs, rather than church sector specific theology. Second, it affected the sectoral composition of fixed investment. Particularly in Protestant regions, new construction shifted from religious toward secular purposes, especially the building of palaces and administrative buildings, which reflected the increased wealth and power of secular lords. Reallocation was not driven by preexisting economic or cultural differences. Our findings indicate that the Reformation played an important causal role in the secularization of the West.

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  • Davide Cantoni & Jeremiah Dittmar & Noam Yuchtman, 2018. "Religious Competition and Reallocation: the Political Economy of Secularization in the Protestant Reformation," The Quarterly Journal of Economics, Oxford University Press, vol. 133(4), pages 2037-2096.
  • Handle: RePEc:oup:qjecon:v:133:y:2018:i:4:p:2037-2096.
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    Cited by:

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    2. Sascha O. Becker & Luigi Pascali, 2019. "Religion, Division of Labor, and Conflict: Anti-semitism in Germany over 600 Years," American Economic Review, American Economic Association, vol. 109(5), pages 1764-1804, May.
    3. Alberto Bisin & Jared Rubin & Avner Seror & Thierry Verdier, 2021. "Culture, Institutions & the Long Divergence," Working Papers 21-04, Chapman University, Economic Science Institute.
    4. Uribe-Castro, Mateo, 2019. "Expropriation of church wealth and political conflict in 19th century Colombia," Explorations in Economic History, Elsevier, vol. 73(C), pages 1-1.
    5. Mohamed Saleh & Jean Tirole, 2021. "Taxing Identity: Theory and Evidence From Early Islam," Econometrica, Econometric Society, vol. 89(4), pages 1881-1919, July.
    6. Sascha O. Becker & Jared Rubin & Ludger Woessmann, 2020. "Religion in Economic History: A Survey," CESifo Working Paper Series 8365, CESifo.
    7. Davide Cantoni & Noam Yuchtman, 2020. "Historical Natural Experiments: Bridging Economics and Economic History," NBER Working Papers 26754, National Bureau of Economic Research, Inc.
    8. Martina Cioni & Giovanni Federico & Michelangelo Vasta, 2020. "The two Revolutions in Economic History," Working Papers 0192, European Historical Economics Society (EHES).
    9. David de la Croix & Fabio Mariani & Marion Mercier, 2019. "Driven by Institutions, Shaped by Culture: Human Capital and the Secularization of Marriage in Italy," LIDAM Discussion Papers IRES 2019022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Schaff, Felix, 2020. "When ‘the state made war’, what happened to economic inequality? Evidence from preindustrial Germany (c.1400-1800)," LSE Research Online Documents on Economics 107046, London School of Economics and Political Science, LSE Library.
    11. Gagliarducci, Stefano & Tabellini, Marco, 2021. "Faith and Assimilation: Italian Immigrants in the US," IZA Discussion Papers 14567, Institute of Labor Economics (IZA).
    12. Kersting, Felix & Wohnsiedler, Iris & Wolf, Nikolaus, 2020. "Weber Revisited: The Protestant Ethic and the Spirit of Nationalism," The Journal of Economic History, Cambridge University Press, vol. 80(3), pages 710-745, September.
    13. Endrich, Marek & Gutmann, Jerg, 2020. "Pacem in Terris: Are Papal Visits Good News for Human Rights?," ILE Working Paper Series 37, University of Hamburg, Institute of Law and Economics.
    14. Lars Boerner & Jared Rubin & Battista Severgnini, 2019. "A Time to Print, a Time to Reform," Working Papers 19-07, Chapman University, Economic Science Institute.
    15. Sascha O. Becker & Luigi Pascali, 2019. "Religion, Division of Labor, and Conflict: Anti-semitism in Germany over 600 Years," American Economic Review, American Economic Association, vol. 109(5), pages 1764-1804, May.
    16. Guillaume Blanc, 2020. "Modernization Before Industrialization: Cultural Roots of the Demographic Transition in France," Working Papers hal-02318180, HAL.
    17. Liang, Yinhe & Dong, Zhiyong, 2019. "Has education led to secularization? Based on the study of compulsory education law in China," China Economic Review, Elsevier, vol. 54(C), pages 324-336.
    18. Dittmar, Jeremiah & Seabold, Skipper, 2019. "New media and competition: printing and Europe's transformation after Gutenberg," LSE Research Online Documents on Economics 102614, London School of Economics and Political Science, LSE Library.
    19. Hector Galindo-Silva & Guy Tchuente, 2019. "Fighting for Not-So-Religious Souls: The Role of Religious Competition in Secular Conflicts," Papers 1910.07707, arXiv.org, revised Jul 2021.
    20. Timur Kuran, 2020. "Zakat: Islam’s missed opportunity to limit predatory taxation," Public Choice, Springer, vol. 182(3), pages 395-416, March.
    21. Masera, Federico, 2021. "State, religiosity and church participation," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 269-287.
    22. Dittmar, Jeremiah E. & Meisenzahl, Ralf R., 2020. "Public goods institutions, human capital, and growth: evidence from German history," LSE Research Online Documents on Economics 91195, London School of Economics and Political Science, LSE Library.
    23. Nikolova, Elena & Polansky, Jakub, 2020. "Conversionary Protestants do not cause democracy," GLO Discussion Paper Series 480, Global Labor Organization (GLO).
    24. Jeremiah Dittmar & Skipper Seabold, 2019. "New media and competition: printing and Europe's transformation after Gutenberg," CEP Discussion Papers dp1600, Centre for Economic Performance, LSE.

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    More about this item

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913

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