Jewish Emancipation and Schism: Economic Development and Religious Change ∗ Jean-Paul Carvalho Mark Koyama University of California, Irvine George Mason University June 17, 2016 Abstract This paper studies the impact of Jewish Emancipation and economic develop- ment on Jewish religious culture in 19th century Europe. In Germany, a liberal Reform movement developed in response to emancipation, while ultra-Orthodox Judaism emerged in eastern Europe. We develop a historical narrative and model of religious organization that accounts for the polarized responses by Jewish com- munities. Our explanation is based on a tradeoff between time and money contri- butions. A religious organization chooses between a relatively affluent community that expends little effort on religious participation and a poorer community that devotes a large amount of time and effort to religious activity. Political and economic development shape this tradeoff in unexpected ways, leading to com- plex forms of behavior such as religious schisms and cycles. When preferences are transmitted intergenerationally, organizations tend to be more conservative. Our historical narrative points to further extensions of extant models of religion, as well as providing broader insights into cultural integration and religious change. JEL Classification: D23, N33, Z12, J24 Keywords: economics of religion, club goods, community, economic development ∗Carvalho: Department of Economics, University of California, Irvine, 3151 Social Science Plaza, Irvine, CA 92697,
[email protected]. Koyama: Center for Public Choice, Carow Hall, George Mason University, VA 22030,
[email protected]. We thank the editor and two anonymous referees for their comments. We are grateful for valuable conversa- tions with Eli Berman, Lloyd Cohen, Tyler Cowen, Stephan Funk, Noel Johnson, Tom Klein, Mike McBride, Avner Offer, Francis Teal, Jared Rubin, Gaston Yalonetzky and Peyton Young.