July 1, 2011

Development and Religious Polarization

The Emergence of Reform and Ultra-Orthodox Judaism
  • Mark Koyama

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics
  • Jean-Paul Carvalho

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Download the article at the University of Oxford Department of Economics.

Jewish emancipation in nineteenth century Europe produced drastically different responses.  In Germany, a liberal variant known as Reform developed, while ultra-Orthodox Judaism emerged in eastern Europe.  We develop a model of religious organization which explains this polarization.  In developed regions, religious authorities embrace the prospect of cultural integration by relaxing probhibitions and benfitting from greater financial contributions.  In poorer regions, religious authorities adopt a strategy of cultural resistance, enforcing prohibitions to elicit greater contributions of effort.  In regions of intermediate development, religious schisms and cycles occur.  This analytic narrative sheds light on how economic development can lead to cultural change.