Medieval Universities, Legal Institutions, and the Commercial Revolution
We present new data documenting medieval Europe’s “Commercial Revolution” using information on the establishment of markets in Germany. We use these data to test whether medieval universities played a causal role in expanding economic activity, examining the foundation of Germany’s first universities after 1386 following the Papal Schism. We find that the trend rate of market establishment breaks upward in 1386 and that this break is greatest where the distance to a university shrank most. There is no differential pre-1386 trend associated with the reduction in distance to a university, and there is no break in trend in 1386 where university proximity did not change. These results are not affected by excluding cities close to universities or cities belonging to territories that included universities. Universities provided training in newly-rediscovered Roman and Canon law; students with legal training served in positions that reduced the uncertainty of trade in medieval Europe. We argue that training in the law, and the consequent development of legal and administrative institutions, was an important channel linking universities and greater economic activity.
Review by Chris Colvin
The “distance to” literature, as I like to call it, has just had an exciting new addition, from Davide Cantoni (University of Munich) and Noam Yuchtman (Haas School of Business, UC Berkeley). As UK readers will know all too well, our tabloid press is quite obsessed with stories about the distance to school (sometimes even more than house prices). In their new working paper (circulated by NEP-HIS on 2012-04-17), Cantoni and Yuchtman apply this English obsession to explain something altogether different; they use the distance to new post-Schism universities as an indicator of human capital in what may well be a 14th-century natural experiment.
Recent contributions to the “distance to” literature include Sascha Becker and Ludger Woessmann’s 2009 QJE article, which uses distance to Wittenberg as an instrument for Protestantism, Jeremiah Dittmar’s 2011 QJE article, which uses distance to Mainz as an instrument for the adoption of the printing press, and, in an interesting combination of the two, Jared Rubin’s working paper, which uses distance from Mainz as an instrument for the spread of Protestantism through the printing press.
Whilst these all focussed on questions involving the 16th-century Reformation, Cantoni and Yuchtman look at a much earlier Christian division: the 14th-century Papal, or Western, Schism that led to the Avignon-based Antipopes. Europe’s German areas had no universities before this schism. German states largely chose to follow the Roman pope, as a result of which German academics and students could no longer get to school; German academics found themselves in the antipope’s realms and were exiled. Returning home, they establish their own schools in places like Erfust, Heidelberg and Cologne.
Cantoni and Yuchtman argue that this influx-of-the-educated led to a proliferation of legal education, which in turn facilitated economic exchange and helped lead to the Commercial Revolution and the Rise of the West. Their core “distance to” instrument for education is defined as the change in distance between a market and its closest university following the establishment of a new German university. Markets in the west of the German parts of the Holy Roman Empire saw a larger reduction in this distance-to-school measure than in the east, and the interaction of the timing of universities’ arrival and this change in distance correlates nicely with the founding of organised markets.
As with all papers involving natural experiments of history, the authors devote considerable time convincing readers that the arrival of new universities was truly an exogenous event, that these universities would not have been established were it not for the Papal Schism. One of the ways they do this is with “placebo regressions” involving parts of Europe affected by the Schism, but which saw no change in the trend in university establishment, such as England. However, by their own admission, the most important part of English legal education at the time took place in London, at the Inns of Court, rather than at Oxbridge, which were basically glorified seminaries for the rich; perhaps they could consider the Inns as a de facto university in their next version of the paper. Another placebo regression I would like to see would involve ancient universities (like Northampton, Lucca and Würzburg) that were short-lived: do their results still hold if these failed universities are included?
Unfortunately, Cantoni and Yuchtman decided to distribute their working paper using the NBER, which means it is behind the Great Academic Firewall; only individuals clicking on the paper from within a university network can download it for free. Fortunately, Yuchtman has also uploaded a copy on his personal webpage. I think it is high time for the NBER to stop charging punters to access its papers; members should vote with their feet and distribute their work-in-progress in alternative ways!