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

Max Weber attributed the higher economic prosperity of Protestantregions to a Protestant work ethic. We provide an alternative theory: Protestant economies prospered because instruction in reading the Biblegenerated 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 tobetter education. Our results are consistent with Protestants’ higher literacy accounting for most of the gap in economic prosperity.