The Implications of Cultural Background on Labour Market Choices: the Case of Religion and Entrepreneurship

Luca Nunziata, Lorenzo Rocco
University of Padua, Italy

This paper aims at contributing to the recent literature on the relationship between culture and labour market outcomes by analyzing that peculiar aspect of cultural background represented by religion in relation to the choice of becoming an entrepreneur. We focus on the implications of Protestant versus Catholic religious denominations, each considered as distinct confessions of the same religion, i.e. Christianity. Our empirical analysis is based on European Social Survey data collected in four waves between 2002 and 2008 in 22 European countries. We capture the differential impact of Protestant versus Catholic ethic through a difference-in-differences approach based on the diverse minority status of both confessions across European regions. Our analysis suggests that religious denomination significantly affects the likelihood of becoming an entrepreneur (variously defined), after differencing out all possible confounders related to the minority versus majority characteristics of each religion denominations across regions, and controlling for a large set of controls at the individual level. On average, a protestant individual has a 2% to 5% higher probability of being self-employed than a catholic individual. Our results are robust to a number of robustness checks and to analogous estimations on ISSP data collected on a subset of European countries in 1998 which enable to control for religious family background and intensity.

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