Was Weber Wrong? A Human Capital Theory of Protestant Economic History^*

TLDR

Weber linked Protestant regions’ prosperity to a work ethic. The study proposes that Protestant prosperity stems from Bible‑reading instruction building human capital. The authors use county‑level Prussian data and distance to Wittenberg as an instrument for Protestantism to test the theory. Protestantism raises prosperity and education, with higher literacy explaining most of the prosperity gap.

Abstract

Max Weber attributed the higher economic prosperity of Protestant regions to a Protestant work ethic. We provide an alternative theory: Protestant economies prospered because instruction in reading the Bible generated the human capital crucial to economic prosperity. We test the theory using county-level data from late-nineteenth-century Prussia, exploiting the initial concentric dispersion of the Reformation to use distance to Wittenberg as an instrument for Protestantism. We find that Protestantism indeed led to higher economic prosperity, but also to better education. Our results are consistent with Protestants' higher literacy accounting for most of the gap in economic prosperity.