Abstract
A growing corpus of literature has explored the influence of religion on economic attitudes and behavior. The present paper investigates the effect of religion on labor market performance using a novel approach to control for the endogeneity of religion. It proposes contingency experience, individual experiences of existential insecurity, as an instrumental variable of a person’s religiosity. The empirical analysis uses data from a household survey in South Africa specifically designed for this study. The econometric approach is the estimation of instrumental variable ordered probit and linear probability models. Using the Centrality of Religiosity Scale (CRS), the analysis differentiates between effects of individual religious intensity and of religious affiliation. The findings show that individual religiosity, measured in the CRS, has a robust and positive effect on labor market performance. Religious affiliation does not seem to affect labor market performance. The positive effect on religiosity is documented in a set of ordered and binary outcome models across different indicators of labor market performance. The study concludes that the intensity of belief exerts an influence on labor market attitudes and outcomes, while affiliation in religious communities (indicating different content of belief) does not seem to make a difference.
Highlights
The findings show that individual religiosity, measured in the Centrality of Religiosity Scale (CRS), has a robust and positive effect on labor market performance
The general positive effect of individual religiosity on labor market performance is robust across a set of different specifications—even when including differentiated, context-relevant indicators of church membership and when restricting the analysis to subgroups of people not affiliated with any church and not practicing African traditional religion
The results point towards a positive relationship between the practice of African traditional religion and labor market performance even when controlling for religiosity—in this study, we cannot ascertain whether there are causal effects of African traditional religion on labor market performance
Summary
The most prominent study on the influence of religion on economic attitudes and outcomes is Max Weber’s The Protestant Ethic and the Spirit of Capitalism (Weber [1920] 1958). Weber argued that the Protestant Reformation produced so decisive a shift in individual economic attitudes that it caused the emergence of capitalist economic thinking. Since its first publication in 1904, Weber’s hypothesis has received widespread attention from various academic disciplines, albeit without unanimous conclusions regarding its validity (Basten and Betz 2013; Becker and Woessmann 2009; Cantoni 2015). Weber’s original study was a reaction to the Marxist school of dialectic materialism, which considered religion to be part of a social superstructure that inhibited social and economic progress (Marx [1843] 1972). The common assumption of both schools of thought is that religion does play an important role in shaping individual attitudes and motivations
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