E¤ect of Religion on Economic Activity

This research establishes that religiosity has a persistent e¤ect on economic outcomes. First we use a sample of migrants in the US to establish that religiosity at the country of origin has a long lasting e¤ect on the religiosity of migrants. Second, exploiting variations in the inherited component of religiosity of migrants, our analysis uncovers the causal e¤ect of religiosity on economic activity using a panel of countries for the period 1935-2000. The empirical \u85ndings suggest that i) church attendance has a positive impact on economic outcomes; ii) religious beliefs in the existence of god, hell, heaven and miracles have no systematic e¤ect on economic outcomes, and iii) stronger faith is associated with prosperity. Moreover we extend our analysis to uncover the channels via which religiosity operates. Notably, the positive e¤ect of religious participation and of stronger faith on economic outcomes operates via the creation of social capital and the development of traits, such as hard work and thrift, that are conducive to growth