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In this paper, we empirically test the role that religious and political institutions play in the accumulation of human capital. Using a new data set on literacy in colonial India, we find that Muslim literacy is negatively correlated with the proportion of Muslims in the district, although we find no similar result for Hindu literacy. We employ a theoretical model which suggests that districts which experienced a more recent collapse of Muslim political authority had more powerful and better funded religious authorities, who established religious schools which were less effective at promoting literacy on the margin than state schools. We test this hypothesis econometrically, finding that the period of Muslim political collapse has a statistically significant effect on Muslim literacy while controlling for it eliminates the significance of the proportion of Muslims on Muslim literacy. This suggests that the “long hand of history” has played some role in subsequent differences in human capital formation through the persistence of institutions discouraging literacy.


NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Comparative Economicsvolume 39, issue 1, in 2011. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in DOI: 10.1016/j.jce.2010.06.001

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