New Economic Research on Protestant Reformation

I just came across a new paper showing major economic benefits of the Protestant Reformation: “Reallocation and Secularization: The Economic Consequences of the Protestant Reformation” by Davide Cantoni, Jeremiah Dittmar, and Noam Yuchtman (here). It’s technical. Their conclusion:

“Religious organizations have been among the most economically important institutions in human societies throughout history (Finer, 1999). These organizations historically have accumulated financial capital, possessed land, attracted human capital, and ruled regions…. Not only did the Reformation result in a decline in the economic power of Europe’s most powerful institution at the time—the Catholic Church—it also produced a sharp shift in the allocation of economic resources toward secular uses. Secular lords exploited the ideological shock to the Catholic Church to confiscate monastery resources. Highly skilled labor moved from church careers toward secular careers, including in expanding secular administrations, particularly in regions that adopted the Protestant religion. Consistent with economic theory, university students, anticipating lower and more uncertain returns to church-career-specific training in theology, began to accumulate more general human capital, studying the arts, law, and medicine. The shift in resources toward secular activity was made tangible in the new construction occurring in 16th century Germany, which shifted sharply toward secular purposes, particularly in Protestant regions.”

I believe the converse was true after Constantine, when a huge amount of the Empire’s treasure was funneled into the Catholic Church. Secular uses – including the army stationed at the frontier of the Empire – were sharply cut. I believe that helped propel us into what used to be called the Dark Ages, a time of diminished economic and intellectual well-being.