The effects of cultural diversity on innovation and public provision of schooling: Evidence from nineteenth century Prussia

• Applicant: Dr. Francesco Cinnirella
• Subject Area: Economic and Social History
• Term: from 2014 to 2017
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 260621591

There is a growing literature which studies costs and benefits of cultural diversity. On the one hand, cultural diversity may increase productivity due to complementarity in specialization of different ethnic, linguistic, and religious groups. On the other hand, diversity may lead to lower redistribution and under-provision of public goods due to divergent preferences. This project aims to provide new empirical evidence on the costs and benefits of cultural diversity in the specific setting of nineteenth century Prussia.The first objective is to investigate the role of cultural diversity in innovation. In particular, we aim to identify the effect of religious diversity on patenting activity. This is the first project which explores this relationship for a period of intense technological progress such as the German industrial revolution. In fact, Prussia constitutes an ideal laboratory to study the effect of religious diversity on innovative activity. For historical reasons Prussia is characterized by a pronounced religious and ethnic heterogeneity due to the cohabitation of Protestants, Catholics, and Jews (plus other smaller religious groups). Using census data at the county level on the religious composition of the population in 1815, we can try to identify exogenous variation in religious diversity in 1871 and thus to estimate its causal effect on innovative activity.The second objective is to shed light on the mechanisms behind the effect of diversity on innovative activity. This is possible by using data on the religious composition of dozens of industries reported in the Prussian occupational census of 1882. This allows us to understand whether the complementarities between different cultures have a positive effect on innovative activity only for specific industrial sectors. In addition, we will also investigate the existence of spillover effects. In particular, we can test whether cultural diversity functioned as a channel for spillover of technological knowledge analyzing to what extent diversity helped the diffusion of technology across technologically and geographically related industries.Finally, we want to study the effect of linguistic and religious fractionalization on the provision of public education. The coexistence of linguistically heterogeneous groups might have created conflict of preferences with respect to the typology of public education to provide. This in turn might have led to an under-provision of public schooling in the form of a lower number of new school establishments or a lower number of teachers. By using new data on the language spoken by primary school pupils at home and on their religion and data on central and local expenditure on public education, we want to assess how religious and linguistic diversity affected the financing of public schools at the local level.

• DFG Programme: Research Grants