They use the tool made popular by likes of Acemoglu/Robinson. One region gets these social institutions and other does not? What is the overall impact on one vs the other? This time the region is Germany and we have cities instead of countries. There were certain cities where Protestant movement led to development in some cities over others:
Throughout history, most states have functioned as kleptocracies and not as providers of public goods. This column analyses the diffusion of legal institutions that established Europe’s first large-scale experiments in mass public education. These institutions originated in Germany during the Protestant Reformation due to popular political mobilisation, but only in around half of Protestant cities. Cities that formalised these institutions grew faster over the next 200 years, both by attracting and by producing more highly skilled residents.
We test the hypothesis that cities with city-level Reformation laws by 1600 subsequently grew relatively quickly. Our first finding is that cities that adopted the Reformation institutions grew to be at least 25% larger in 1800 than observably similar cities. In contrast, we find no variation in growth associated with Protestant religion conditional on public goods institutions.
Historical evidence suggests that migration drove city growth in pre-industrial Europe (de Vries 1986, Bairoch 1991, Reith 2008). Existing quantitative evidence on migration is limited. We collect novel microdata on the migration and local formation upper tail human capital (Mokyr 1999, Squicciarini and Voigtlander 2015). Our data, drawn from the Deutsche Biographie, comprise thousands of the most important cultural and economic figures in German history between 1300 and 1800 – jurists, merchants, writers, artists, composers, and educators. We use the data to document the human capital response to institutional change.
Figure 2 shows how migration responded to institutional change by plotting the number of upper tail human capital migrants observed in cities that adopted public goods laws, cities that became Protestant but did not formalise public goods provision, and Catholic cities. These cities were attracting similarly small numbers of migrants before the Reformation, which is marked by the vertical line at 1518. A large shift in migration towards cities with public goods institutions appears in the 1520s, as legal reforms were passed. This gap persisted over the next 200 years and notably was driven by differences in migration from small towns to cities, not by a ‘brain drain’ from less to more desirable cities.
We similarly find that cities with public goods institutions began producing more upper tail human capital starting after 1520. We find no differences in the local formation of upper tail human capital before the Reformation and 50-200% higher formation of upper tail human capital after the Reformation when we compare cities with laws supporting public goods provision to cities without these institutions.
We could have many such studies in India as well. There is so much variety here in terms of such social institutions. But there are hardly any such studies. Data could be an issue and things may not be proved as rigorous. But atleast we could have some ideas and hypothesis which explain these regional/city differences..