Stairway to Heaven: Religion and Human Capital in Ghana

Type Working Paper
Title Stairway to Heaven: Religion and Human Capital in Ghana
Publication (Day/Month/Year) 2009
It has been argued that historically, religion has been associated with economic success, which would also include, therefore, human capital developments. Perhaps most well known among the suggested pathways is Weber’s ?Protestant ethic,? presumably explaining the historical differentials between Protestant and Catholic economic success. I argue here—focusing explicitly at human capital accumulation as the criterion for ?economic success?—for an even more fundamental religious distinction, namely between oral and written tradition religions and also address several issues from previous studies. Specifically, while previous studies of the religion-human capital link have mainly focused on only one religion; on developed countries, especially the US; and also have not allowed religious affiliation to be endogenously determined, these possibilities are explored here, examining a nationally representative household survey from Ghana. I find a strong relationship between individual religious affiliation and human capital as measured by years of schooling, with Christians as a group having completed more years of schooling than Muslims and Animists / Traditionalists, thus confirming the predictions from the conceptual framework. At the same time, while there is some heterogeneity in the strength of this relationship within different denominations of Christianity, this result does not appear to be driven by one particular Christian denomination. The instrumental variables estimation strategy proves to be preferable to OLS, while at the same time yielding higher impact estimates in the religion-human capital relations ship. In turn, this indicates that previous studies, which have typically assumed religious affiliation was exogenous, may have systematically underestimated the strength of the religion-human capital link. Directions for future research are also discussed.

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