Protestantism, labor force participation, and employment across countries

American Journal of Economics and Sociology, The, Oct, 2007 by Horst Feldmann

I

Introduction

As MAX WEBER ([1904-1905] 2002) argued in his famous essay The Protestant Ethic and the Spirit of Capitalism, Protestantism--particularly its Calvinist branch--cultivated an intense devotion to one's work or "calling," in order to assure oneself that one was predestined for salvation. According to Weber, Protestantism sanctified and generalized patterns of behavior among its adherents that were conducive to, and indeed essential for, the rise of modern capitalism. Key among these virtues was an intense commitment to work. As evidence supporting his thesis, he noted, inter alia, the larger participation of Protestants, as compared to Catholics, in modern business life of Germany at his time.

Weber ([1922] 1978) also claimed that Eastern religions like Buddhism and Islam are not supportive of the kind of disciplined work that characterizes modern capitalism. Furthermore, using survey data covering 66 countries, Guiso et al. (2003) recently found that Muslims have an especially conservative attitude toward working women.

Against this background we hypothesize that, ceteris paribus, labor force participation and employment in countries in which the largest portion of the population practices Protestant religion are higher than in other countries, particularly among women. Note that we do not argue that religion necessarily has a direct impact on most people's behavior today. Although in many countries parents, schools, and churches bring children up by teaching them specific religious beliefs and norms, in so-called secularized societies the impact of religion may be indirect. Indeed, Weber ([1904-1905] 2002, [1948] 1991) thought that the growth in rationalism (in economic life, public administration, and, particularly, in science), although initially stimulated by Protestantism, would increasingly undermine Protestantism's position as a social power. He argued that Protestantism had been important for the rise of modern capitalism only during the 16th to 18th centuries, namely, to stimulate entrepreneurial spirit and to assimilate workers into the factory system. Weber thought that the Protestant underpinnings of individual productivity had been replaced by secular institutions in the 19th century.

This view of an indirect impact of religion is corroborated by a more recent empirical study (Inglehart and Baker 2000). Using survey data from 65 societies, the authors find that:

   given religious traditions have historically shaped the national
   culture of given societies, but that today their impact is
   transmitted mainly through nationwide institutions, to the
   population of that society as a whole--even to those who have
   little or no contact with religious institutions.... The fact that
   a society was historically shaped by Protestantism or Confucianism
   or Islam leaves a cultural heritage with enduring effects that
   influence subsequent developments. (2000: 36, 49)

There are only a few previous empirical studies on the labor market effects of Protestantism. All of them focus on a single aspect: the effect on female labor supply. Schmidt (1993) finds that female labor force participation increased more slowly in Catholic countries than in Protestant ones. Lesthaeghe (1995) reaches a similar result. Similarly, positive correlations are reported between Protestant religion and "female work desirability" (Siaroff 1994) and between percent Protestant and egalitarian attitudes toward women's employment (Hailer and Hoellinger 1994). None of these studies covers a large group of countries. Nor do they control for the impact of most other important institutions that have been found to affect the performance of the labor market.

This article empirically analyzes the effect of Protestant religion on labor force participation and employment rates among the total working-age population as well as among women and young people. Our first set of regressions covers a large group of up to 80 countries from all over the world. This group consists of industrial, developing, and transition countries (for a list of countries, see Appendix A). Subsequently, we present regressions covering a subgroup of 19 industrial countries for which we have better data to control for the impact of labor market institutions and business cycle fluctuations (for definitions and sources of all variables, see Appendix B). (1) Using data from two sets of countries, in each case employing different control variables, enables us to check the robustness of our results. (2) Section II describes the variables and the empirical strategy. Section III presents and discusses the regression results. Section IV concludes.

II

Data

WE USED THE CIA's (2005) World Factbook to identify countries in which the largest portion of the population practices Protestant religion. Our variable of interest, Protestant religion, is a dummy rather than a variable indicating the percentage share of adherents to Protestantism. As dominant religions have shaped the national culture of given societies, the differences in values between religious groups within given societies are in fact relatively small (Inglehart and Baker 2000). Thus, a dummy variable for Protestantism appears to be more likely to capture the effect of this religion on labor market performance.