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Religious competition and reallocation: the political economy of secularization in the Protestant Reformation

Cantoni, Davide, Dittmar, Jeremiah and Yuchtman, Noam (2018) Religious competition and reallocation: the political economy of secularization in the Protestant Reformation. The Quarterly Journal of Economics, 133 (4). pp. 2037-2096. ISSN 0033-5533

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Identification Number: 10.1093/qje/qjy011

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 pre-existing economic or cultural differences. Our findings indicate that the Reformation played an important causal role in the secularization of the West.

Item Type: Article
Official URL: https://academic.oup.com/qje
Additional Information: © 2018 The Authors
Divisions: Centre for Economic Performance
Subjects: B Philosophy. Psychology. Religion > BL Religion
B Philosophy. Psychology. Religion > BR Christianity
D History General and Old World > D History (General) > D901 Europe (General)
H Social Sciences > H Social Sciences (General)
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
JEL classification: E - Macroeconomics and Monetary Economics > E0 - General
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N13 - Europe: Pre-1913
N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Income, and Wealth > N33 - Economic History: Labor and Consumers, Demography, Education, Health, Income and Wealth: Europe: Pre-1913
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 18 Dec 2018 14:49
Last Modified: 20 Jul 2019 00:19
Projects: 638957
Funders: European Union's Horizon 2020 Research and Innovation Programme
URI: http://eprints.lse.ac.uk/id/eprint/91319

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