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Reallocation and secularization: The economic consequences of the Protestant reformation

Cantoni, Davide, Dittmar, Jeremiah E. and Yuchtman, Noam (2017) Reallocation and secularization: The economic consequences of the Protestant reformation. CEP Discussion Papers (CEPDP1483). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

The Protestant Reformation, beginning in 1517, was both a shock to the market for religion and a first-order economic shock. We study its impact on the allocation of resources between the religious and secular sectors in Germany, collecting data on the allocation of human and physical capital. While Protestant reformers aimed to elevate the role of religion, we find that the Reformation produced rapid economic secularization. The interaction between religious competition and political economy explains the shift in investments in human and fixed capital away from the religious sector. Large numbers of monasteries were expropriated during the Reformation, particularly in Protestant regions. This transfer of resources shifted the demand for labor between religious and secular sectors: graduates from Protestant universities increasingly entered secular occupations. Consistent with forward-looking behavior, students at Protestant universities shifted from the study of theology toward secular degrees. The appropriation of resources by secular rulers is also reflected in construction: during the Reformation, religious construction declined, particularly in Protestant regions, while secular construction increased, especially for administrative purposes. Reallocation was not driven by pre-existing economic or cultural differences.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2017 The Authors
Divisions: Centre for Economic Performance
Subjects: B Philosophy. Psychology. Religion > BL Religion
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 21 Jul 2017 10:01
Last Modified: 01 Apr 2019 23:06
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/83617

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