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“What’s Love Got to Do with It? The Modern Family and Its Importance for Protestant Economic History”
[LONG ABSTRACT]
Several alternative explanations have been offered for the relative economic prosperity of Protestant communities, from Max Weber’s famous thesis about the role of Protestant values in the emergence of modern capitalism (Weber, 1905) to higher literacy (Becker and Woessmann, 2009) to superior legal institutions (Dittmar and Meisenzahl, 2016). Moreover, while these theories are often framed in the empirical literature as being mutually exclusive, numerous studies outright dispute the existence of specific economic benefits associated with Protestantism (Cantoni, 2014).
This paper proposes a new explanation of Protestant economic progressiveness that is broad and generic enough to accommodate all aforementioned theories and findings. In particular, I argue that the basic source of Protestant progressiveness lies not with economics but rather with the family. In recognition of social historians' claim that marriage was the most visible and influential institutional change associated with Reformation, I specifically emphasize the role of Calvin's insistence that spouses had a religious duty to love one another, rationalize domestic life, and educate children for the glory of God. Over time, this helped usher in the emergence of the modern nuclear family, which in turn influenced fertility choice. Importantly, this theory has the added benefit of highlighting previously overlooked differences between Protestant denominations that were economically also relevant. Specifically, Lutherans took the issue of rational organization of the family less seriously, and did not engage in as profound reforms of the family as Calvinists.
The empirical exercise of the paper concerns a new hand-collected township-level dataset from Hungary, the only country where a rich blend of Catholic and various Protestant denominations lived in a mixed inter-religious environment. Exploiting these geographical patterns for identification purposes reveals that, in 1910, Calvinist townships were significantly richer than their Catholic or Lutheran neighbors, even after differences in literacy and economic fundamentals are accounted for. The only salient source of this divergence concerns the more liberal marriage patterns, smaller households and lower fertility that is observed in Calvinist places, both before and during the demographic transition.
To explain how exogenous variation in fertility translates into divergent growth trajectories, I develop a simple theoretical model of fertility choice along the lines of the unified growth theory. This model implies that lower preference for children (or higher education costs associated with them) leads to higher steady-state per capita income in societies characterized by fixed physical factors of production such as agrarian Hungary of the 19th century. Empirical tests of the model’s prediction confirm that Calvinist places made a less crowded, less fragmented and more efficient use of agricultural land than their Catholic or Lutheran neighbors.