The Unequal Spirit of the Protestant Reformation: Religious Confession and Wealth Distribution in Early Modern Germany

Speaker: Felix Schaff Abstract: This paper studies the impact of the Protestant Reformation on wealth distribution and inequality in confessionally divided Germany between 1400 and 1800. The Reformation expanded social welfare but provided it in a particularistic way to insiders only. This gave Protestantism an ambiguous character in terms of redistribution and its impact on inequality. I model that trade-off theoretically and test its implications empirically, using a difference-in-differences and an instrumental variable strategy. In line with the theoretical framework, I document that the Reformation exacerbated inequality overall by making marginal poor people relatively poorer. The result is driven by the introduction of new particularistic poor relief policies in Protestant communities. The inegalitarian character of Protestantism, typically found in contemporary societies, can be traced back to the beginning of the Reformation in the sixteenth century.