Religion and Economic Growth: Evidence from U.S. Counties

Abstract

This paper examines the impact of religious participation on regional economic growth. Using data on GDP growth for United States counties from the Bureau of Economic Analysis (BEA) Regional Economic Accounts and data on county-level religious participation from the Association of Religion Data Archives (ARDA), this paper estimates the impact of religiosity on growth using two-way fixed-effects Barro regressions for the period 2000 to 2020. In our preferred specification, a ten percentage-point increase in the county religious adherent share reduces the 10-year compound annual growth rate of per-capita GDP by 0.14 percentage points (a 19% reduction relative to the sample mean). A battery of sensitivity checks suggests our results are unlikely to be driven by omitted variable bias: both the Oster (2019) adjustment for selection on unobservables and Kinky Least Squares (KLS) regression estimates indicate that OLS understates the negative impact of religion on regional economic growth. We argue that the negative impact of religion on regional economic growth is consistent with previous findings of increased business survival and increased small business activity in a framework where the social capital generated from religious participation results in inefficiently low regional dynamism.