Protestantism and Government Spending: A Negative Relationship? An Empirical Application to Swiss Cantons

University of St. Gallen, Department of Economics, Discussion Paper No. 2008-03

27 Pages Posted: 25 Jan 2008

See all articles by Justina A. V. Fischer

Justina A. V. Fischer

Organization for Economic Co-Operation and Development (OECD); Stockholm School of Economics; University of Hohenheim

Friedrich Schneider

Johannes Kepler University Linz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2008

Abstract

Recent empirical growth literature suggests that cultural factors play a decisive role in economic development, while empirical evidence for their impact on government activity remains scant. In this paper, we conjecture based on Weber's Protestant Ethics that 'Protestant values' such as self-reliance and austerity should affect both the size and scope of governments. More specifically, we hypothesize that smaller government budgets should be observable in more Protestant jurisdictions. Using a panel of sub-federal expenditure in 26 Swiss cantons from 1980 to 1998 we find supporting evidence, observing that the share of Protestants in the cantonal residential population exerts a spending dampening impact. Our results suggest that cultural factors should not be omitted from future public finance analyses.

Keywords: Protestantism, Culture, Government Spending, Public Finance

JEL Classification: H72, Z1, A13, H30

Suggested Citation

Fischer, Justina A.V. and Schneider, Friedrich G., Protestantism and Government Spending: A Negative Relationship? An Empirical Application to Swiss Cantons (January 2008). University of St. Gallen, Department of Economics, Discussion Paper No. 2008-03. Available at SSRN: https://ssrn.com/abstract=1087247 or http://dx.doi.org/10.2139/ssrn.1087247

Justina A.V. Fischer (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

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Stockholm School of Economics

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University of Hohenheim

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Friedrich G. Schneider

Johannes Kepler University Linz - Department of Economics ( email )

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+43 732 2468 8208 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for the Study of Labor (IZA)

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