The Long-run Impact of the Dissolution of the English Monasteries

Leander Heldring (briq Institute)
James A. Robinson (University of Chicago)
Sebastian Vollmer (University of Goettingen)

Abstract : We examine the long-run economic impact of the Dissolution of the English monasteries in 1535 during the Reformation. Since monastic lands were not encumbered by inefficient types of customary tenures linked to feudalism, the event provides variation is the longevity of feudal institutions which is plausibly linked to labor and social mobility, the productivity of agriculture and ultimately the location of the Industrial Revolution. We show that parishes impacted by the Dissolution subsequently had a greater share of the population working outside of agriculture, experienced a `rise of the gentry', higher investment, innovation and productivity in agriculture, and eventually higher levels of industrialization. Our results are consistent with an explanation of the Industrial Revolution which emphasizes the commercialization of society as a key pre-condition for taking advantage of technological change and new economic opportunities.

Religious Festivals, Economic Development, and Social Capital: Evidence from Catholic Saint-day Celebrations in Mexico

Eduardo Montero (University of Michigan)
Dean Yang (University of Michigan)

Abstract : Religious festivals are widespread and persistent features of social life worldwide. Even in poorer societies, households and communities spend nontrivial shares of their income on festivals. What are the economic and social consequences of religious festivals? We study Catholic saint-day festivals in Mexico, exploiting two features of the setting: (i) festival dates vary across the calendar and were determined in the early history of towns during conquest, and (ii) there is considerable variation in the intra-annual timing of the main agricultural seasons. We compare municipalities where festivals overlap with planting or harvest to municipalities where they do not overlap to examine the impacts of festivals on long-run economic development and social outcomes. We find that having festivals during the planting season is associated with worse development outcomes, but higher social capital and lower income inequality. A likely mechanism is that festival spending reduces agricultural investment in the planting season by liquidity-constrained households. At the same time, redistribution via festival-related consumption may be especially valued during the planting season when food stores are low, leading to higher social capital. This suggests that festivals in liquidity-constrained times have social capital benefits, helping explain their persistence despite their economic consequences.

Markets and Rules of Cooperation

Devesh Rustagi (Brown University)

Abstract : Much of the modern trade among humans occurs via markets, yet our understanding of how market exposure shapes our values and institutions is still poor. I investigate a long-standing debate in economics on whether markets foster or deplete unwritten (norms) and written (bylaws) rules that constrain opportunistic behavior and foster cooperation. Answering this question is very difficult because markets are not randomly assigned. I use variation in market exposure across groups of the Arsi Oromo people in Ethiopia, who have common ancestry, religion, and occupation. Markets emerged inadvertently from garrisons that Menelik - the emperor of Ethiopia - established at strategic locations after defeating the Arsi. These markets are held twice a week and are characterized by asymmetric information and the absence of third-party verification. I measure norms as the individual propensity to cooperate if others do the same via a public goods games in the strategy method. Bylaws are measured as written down regulations on the use of natural resource. I find that groups more exposed to markets have stronger norms of cooperation as well as better quality of regulations. This finding is consistent with models where asymmetric information and incomplete contracts create a demand for norms and bylaws, in the absence of which neither party would benefit from the gains of trade. In line with such a mechanism, I find no effect when exposure is from markets without asymmetric information. Survey and experimental data also show that individuals closer to markets hold optimistic beliefs about cooperation and rule following by strangers.