- | Thursday, October 25
- 12:15 PM
- Kaiserplatz 7-9, 4th floor, Room 4.006
Entrepreneurial Freedom as a driving Institution during the German Industrial Take-off
In this paper, I analyze the effect of the abolition of guilds and the introduction of the “Gewerbefreiheit” – entrepreneurial freedom – on economic development during the German industrial take-off. Using the division of the Kingdom of Westphalia and the new borders defined at the Congress of Vienna as a natural experiment, I show that this institutional change led to strong development advantages. This is measured by a population growth advantage in Prussian counties compared to counties in the Electorate of Hesse, which stuck to the old guild system. I utilize a spatial regression discontinuity design around the new borders to justify the causal interpretation of my results. In addition, including two other German states in my analysis demonstrates that the uncovered relation is not unique to the examined states, but holds more generally.