Centre for Economic Performance
London School of Economics
London WC2A 2AE
NBER Working Papers and Publications
|October 2017||Religious Competition and Reallocation: The Political Economy of Secularization in the Protestant Reformation|
with Davide Cantoni, Noam Yuchtman: w23934
Using novel microdata, we document an unintended, first-order consequence of the Protestant Reformation: a massive 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 important consequences. First, it shifted the allocation of upper-tail human capital. Graduates o...