Public Goods Institutions, Human Capital, and Growth: Evidence from German History∗ Jeremiah E. Dittmar Ralf R. Meisenzahl London School of Economics Federal Reserve Board Abstract What are the origins and consequences of the state as a provider of public goods? We study public goods provision established through new laws in German cities during the 1500s. Cities that adopted the laws subsequently began to differentially produce and attract human capital and to grow faster. Legal change occurred where ideological competition introduced by the Protestant Reformation interacted with local politics. We study plagues that shifted local politics in a narrow period as sources of exogenous variation in public goods institutions, and find support for a causal interpretation of the relationship between legal change, human capital, and growth. JEL Codes: I25, N13, O11, O43 Keywords: Institutions, Political Economy, Public Goods, Education, Human Capital, Growth, State Capacity. ∗Dittmar: LSE, Centre for Economic Performance, and CEPR. Address: Department of Economics, LSE, Houghton Street, London WC2A 2AE. Email:
[email protected]. Meisenzahl: Federal Reserve Board. Address: Federal Reserve Board, 20th and C Streets NW, Washington, DC 20551. E-mail:
[email protected]. We would like to thank Sascha Becker, Davide Cantoni, Nicola Gennaioli, Joel Mokyr, Andrei Shleifer, Yannay Spitzer, Joachim Voth, Noam Yuchtman, anonymous referees, and colleagues at American, Auburn, Bonn, Brown, CEPR, the Economic History Association conference, the Federal Reserve Board, George Mason University, Hebrew University, LSE, Northwestern University, NYU Stern, Reading University, Rutgers, Toulouse, Trinity, Warwick, UC Berkeley, University of Munich, University of Mannheim, Vanderbilt University, the NBER Culture and Institutions Conference, NBER Summer Institute, 2015 EEA conference, 2015 SGE conference, 2015 German Economists Abroad meeting, and 2015 ARSEC conference for helpful comments.