Medieval Universities, Legal Institutions,
and the Commercial Revolution
Presented by
Ming, Yang @ EC764
Department of Economics
Boston University
Sep. 2016
INTRODUCTION
■ THE PAPER
Cantoni, Davide and Noram Yuchtman (2014). “Medieval universities, Legal
institutions, and the Commercial Revolution,” Quarterly Journal of
Economics, 129, 823-887.
■ BOILS DOWN TO ONE STATEMENT
Medieval Universities played a causal role in expanding economic activity.
■ TRANSLATED TO THE LANGUAGE OF ECONOMICS
The trend rate of market establishment in Germany breaks upward in 1386,
which can be explained by the contemporaneous foundation of Germany’s
first universities, through the channel that these universities provided
students with legal training to law and administrative institutions, whose
development contributed to greater economic activity in medieval Germany.
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MAIN PROBLEMS
By comparison between these two statements, we have the following main
questions:
■ QUESTION 1: INDICATOR OF ECONOMIC ACTIVITY
Why is establishment of markets a good indicator of economic activity?
■ QUESTION 2: EXOGENEITY
Is the foundation of universities exogenous to economic activity? If not,
there will be endogeneity. For example, is it possible that new universities
were more likely to be build in rich areas?
■ QUESTION 3: MEASURE THE INFLUENCE OF UNIVERSITIES
What is the variable used to measure the effects that the foundation of
universities had on cities?
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MAIN PROBLEMS
■ QUESTION 4: EXPLANATORY POWER
Although greater economic activity showed up in companion with the
emergence of universities, it does not necessarily mean the latter has a strong
explanatory power to the former.
■ QUESTION 5: CAUSAL MECHANISM
Given that foundation of the first universities in Germany had a significant
contribution to the expanding economic activity, how could we know it is
through the channel suggested by the authors?
■ QUESTION 6: ROBUSTNESS
How sensitive is the conclusion to variant model specification?
Also, to what degree can our example represent Medieval Europe? Because
the title says “Medieval Universities…” not “14th Century German
Universities…”.
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ COMMERCIAL REVOLUTION
Time: 900~1500 A.D.; Late Middle Age
Location: Europe
Event: Cities growth; Trading expansion
Historical Importance:
1) Set stage for Europe’s exploration and colonization of the world
2) Institutional and political development lead to modernization of Europe
Cause:
Technological innovation → Agricultural surplus → People released from
farming → Larger urban population pursuing mental, religious and cultural
careers → Towns’ size grows with higher consumption level → Larger
markets for merchants and craftsmen. (Robert Lopez, 1976)
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ EXISTING DOCUMENTATIONS FOR COMMERCIAL REVOLUTION
Source
Measure
Epstein, 2000
rise of fairs
Verhulst, 1999
physical expansion of cities
Buringh and van Zanden,
2009
Increased output of books
McEvedy and Jones 1979;
Bairoch, Batou, and
Che`vre, 1988
growth of population and
urbanization
Although these documentations are informative, they fall short in:
1) Frequency;
2) Geographic coverage;
3) Ability to capture economic change directly.
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ BURINGH AND VAN ZANDEN’S (2009) DATA
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ CANTONI AND YUCHTMAN’S NEW DATA
Name: Market Establishment/ Market Grant
Source: The Deutsches Städtebuch, by Erich Keyser (1939–1974)
Size: 2,256 German cities
Description: The market grant is the official permission giving a city the
right to hold a specific market. It also allows the local lord to tax trade in the
market, coin money and require its use in the market.
Note: One city could have more than one market grants, which gave it the
right to hold multiple markets (or fairs).
Advantage:
1) High frequency annual records on many economic indices, helpful for
hypothesis tests.
2) More direct relationship with economic changes.
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ WHY IS MARKET ESTABLISHMENT A GOOD INDICATOR OF
ECONOMIC ACTIVITY? (QUESTION 1)
Firstly, there is a high correlation between a city’s size and the granting of
market right to that city. And the cities’ sizes is a commonly used measure of
economic development in the premodern world. Evidence is available in Online
Appendix: LINK.
Secondly, 30 out of 63 cities receiving one or more market grants in the 20 years
following the foundation of the first German university experience notable
construction, which is another observable indicator of economic activity. Details are
in Online Appendix.
Finally, they consulted a report on the markets existing in Germany in 1936,
Verzeichnis der Märkte und Messen im Deutschen Reich im Jahre 1936, and these
two documents exhibit high matches in their records of characteristic (frequency/
good traded) of markets in the same cities.
Conclusion: Granting of market right actually indicates increased commercial
activity.
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ PLOTTING CITIES IN THE DATASET ON THE MAP
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ CITY INCORPORATIONS & MARKET GRANTS
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COMMERCIAL REVOLUTION & ESTABLISHMENT OF MARKETS
■ CUMULATIVE NUMBER OF CITY INCORPORATIONS & MARKET
GRANTS
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PAPAL SCHISM & FOUNDATION OF UNIVERSITIES IN GERMANY
■ POSSIBLE CHANNELS THROUGH WHICH MEDIEVAL
UNIVERSITIES HAVE SUPPORTED ECONOMIC ACTIVITY
1. Produced Human Capital by training skills that are
commercially useful. (Arithmetic, Geometry, Astronomy…)
2. Helped in forming networks with the Latin-speaking world, which
would have promoted trading.
3. Trained a large number of students in canon and civil law, and this
specific type of human capital is especially important. Development
in merchant law, staffing of courts, and enforcement of contracts
resolves the uncertainty, thus transaction costs in economy. (Greif,
2000)
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PAPAL SCHISM & FOUNDATION OF UNIVERSITIES IN GERMANY
■ PROBLEM IN USING UNIVERSITIES AS REGRESSOR TO EXPLAIN
COMMERCIAL REVOLUTION: EXOGENEITY (QUESTION 2)
Papal Schism (from 1378): After the death of Pope Gregory XI in 1378,
there had been two rival popes, Urban VI in Rome, and Clement VII in
Avignon. Secular Lords chose to pledge allegiance to one or the other.
France and Spain were loyal to the French pope, Clement VII.
The Holy Roman Empire and the Italian States were loyal to Rome, i.e.
Urban VI.
Germany was then a part of The Holy Roman Empire, i.e. Heiliges
Römisches Reich deutscher Nation.
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PAPAL SCHISM & FOUNDATION OF UNIVERSITIES IN GERMANY
■ TIMELINE, BEFORE & AFTER THE FOUNDATION OF FIRST
UNIVERSITIES IN GERMANY
1386
Univ. GER
NO
YES
Cause
1. The Church wished to
prevent the spread of heresy,
thus constrained the
establishment of universities.
(Rashdall, 1895).
2. Lack of scholars: They
went abroad to do their study
and research.
1. Political, theological intolerance of France
universities drove scholars and students back
to Germany. Rome had to make up for the
loss.
2. Rome had the incentive to compete with
France, more specifically, with the
Universities of Paris. (Rashdall, 1895).
3. Increase supply of eminent German
scholars coming back from abroad.
(Swanson, 1979)
Result
Students and scholars had to
go abroad to pursue their
study.
Germany saw its first universities established.
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PAPAL SCHISM & FOUNDATION OF UNIVERSITIES IN GERMANY
■ PAPAL SCHISM PROVIDED A NATURAL EXPERIMENT
Papal Schism is a political event, orthogonal to any economic shifts. The
foundation of Germany’s first universities, as a consequence of Papal Schism,
is therefore exogenous to economic activities.
To utilize such a natural experiment, we focus on the period around the
Papal Schism.
Question 2 has been answered.
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PAPAL SCHISM & FOUNDATION OF UNIVERSITIES IN GERMANY
■ INCREASE OF AVAILABLE HUMAN CAPITAL OF GERMANY
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PAPAL SCHISM & FOUNDATION OF UNIVERSITIES IN GERMANY
■ MOST ENROLLED STUDENTS WERE FROM NEARBY AREAS
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PAPAL SCHISM & FOUNDATION OF UNIVERSITIES IN GERMANY
■ MOST ENROLLED STUDENTS WERE FROM NEARBY AREAS
(CONT’D)
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ HOW TO SET A VARIABLE MEASURING THE INFLUENCE OF THE
FOUNDATION OF UNIVERSITIES? (QUESTION 3)
The model set up by the authors links university proximity, and human
capital, to market establishment.
Assumption: medieval universities increased human capital inures in
closer proximity to them.
Such an assumption is supported by the empirical evidence we have just
seen. Historical also provide justification:
(Schwinges, 2000): Many of the first university students came from
nearby regions.
(Wriedt, 2000): Most scholars who became urban officeholders came
from the same city where they later worked, or from neighboring cities.
Thus, question 3 is answered.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ MODEL SETUP
ℎ𝑖𝑖,𝑡𝑡 : Human capital available to city 𝑖𝑖 at time 𝑡𝑡.
To control the effects imposed by economic conditions to demand for
human capital and market establishment, introduce a time trend, it works at
least in a short time window around the Papal Schism:
1
𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑖𝑖,𝑡𝑡 = 𝛼𝛼1 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 + 𝛾𝛾 � ℎ𝑖𝑖,𝑡𝑡
𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑖𝑖,𝑡𝑡 : Number of market grants issued per 1,000 cities.
Human capital is cumulative, it depends on the access to education in
the past years, denote 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑖𝑖,𝑡𝑡 as the distance to the nearest university,
and consider the past 𝑛𝑛 years, we have
2
𝑛𝑛
ℎ𝑖𝑖,𝑡𝑡 = − � 𝛿𝛿𝑡𝑡−𝑗𝑗 � 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑖𝑖,𝑡𝑡−𝑗𝑗
𝑗𝑗=1
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ MODEL SETUP (CONT’D)
∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 : Reduction in distance to a university of city 𝑖𝑖.
∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 = 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑖𝑖,𝑝𝑝𝑝𝑝𝑝𝑝 − 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑖𝑖,𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝
𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑖𝑖,𝑝𝑝𝑝𝑝𝑝𝑝 : The pre-schism minimum distance from city 𝑖𝑖 to a university;
𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑖𝑖,𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 : The post-schism minimum distance from city 𝑖𝑖 to a
university.
■ PANEL DATA MODELLING
3 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑖𝑖,𝑡𝑡 = 𝛼𝛼0 − 𝛼𝛼1 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 + 𝛼𝛼2 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡 + 𝛼𝛼3 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡
+𝛼𝛼4 � ∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 + 𝛼𝛼5 � ∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡
+𝛼𝛼6 � ∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡
+𝛼𝛼7 � ∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡 + 𝜀𝜀𝑖𝑖,𝑡𝑡
𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑖𝑖,𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 : Post-university dummy, =1 for all years after 1386.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ TERMS OF INTERESTS
Terms
Explanation
∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡
� 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡
Indicates whether cities with a larger reduction in distance to a
university experienced a changed trend rate of market
establishment after 1386. We expect it to be positive and
significant.
𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡
Indicates whether cities not experiencing changes in distance
to a university nonetheless experienced a change in the trend
rate of market establishment. It tests the explanatory power of
universities. Should not be significant.
∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡
Indicates whether cities with a large change in distance… in
1386 had different trend rate of market establishment even
before any reduction in distance occurred. It tests if the
changes in market… was actually caused by shrunk distance to
a university. Should not be significant.
∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡
Indicates if there was an immediate jump in market… in 1386.
Our theory says human capital is cumulative, it contributes
through the trend. Therefore it should not be significant.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ QUESTION 4𝟏𝟏⁄𝟐𝟐
Now we have set up tools for falsification, answer Question 4, i.e.
whether universities has a strong explanatory power to commercial
revolution.
However, since the effect of the foundation of universities was not
immediate, it must affect the time trend, which means there could be
multilinearity between ∆𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 and 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 . If so, the standard error of
regressors will be larger than they should be, resulting in that t-tests tend to
reject the null hypothesis, which makes the falsification tests less efficient.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ TIME SERIES MODEL
Aggregate through cities in equation (3), we have the following macrolevel model:
4
𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑡𝑡 = 𝛽𝛽0 − 𝛽𝛽1 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 + 𝛽𝛽2 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡 + 𝛽𝛽3 � 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡 + 𝜂𝜂𝑡𝑡
Similarly, 𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑡𝑡 � 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡 indicates whether there is a change in the trend
rate of market establishment in the pivot year, 1386, and thus is expected to
be positive and significant; 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑡𝑡 indicates whether there was immediate
jump in market establishment right upon the foundation of first universities
in Germany, we expect it to be insignificant.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
Divide the whole sample into two
subgroups, by the reduction of
distance to a university
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ POSSIBLE GENERAL EQUILIBRIUM EFFECTS
With panel data model, it is possible that the establishment of market in
one city reduce the possibility of the establishment of markets in near cities.
So as a treatment, we consider larger units, as territories and geological cells.
Territory: Territorial Lords’ land, affected by political factors.
Cell: 1-degree latitude by 1-degree longitude, determined by natural factors.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
Run
regression
at different
geological
levels, to
exclude the
general
equilibrium
effect
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ PLACEBO TESTS: CHANGE PIVOT YEAR
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ PLACEBO TESTS: CHANGE PIVOT YEAR (CONT’D)
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ ENDOGENEITY OF UNIVERSITY LOCATION
What if the university location is not exogenous? Say, is it possible that
the location of universities was correlated with an unobserved variable that
also stimulated economic activity around the time of the papal schism?
The possible mechanism causing endogeneity suggested by the authors:
1) Local effects: Shocks in an area increases the demand for a university and
markets simultaneously.
2) Geological effects: Demand for a university and economic conditions may
be both correlated through different regions.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
Exclude
three Lords’
territories
containing a
university
city:
Heidelberg,
Cologne and
Erfurt.
To exclude local shocks, e.g.
university may be chosen to build
where good economic times is
anticipated. Or, a local shock can
improve the economic condition,
increasing
The demand for a university and
also market establishment.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
Closer to low countries, which
were richer, resulting a higher
probability to set up markets
Important institutional
differences between east and
west of the Elbe after Black Death
Division into 18 states,
with-in-state
specification, a full
set of 18 dummy
variables
Control longitude variation by
adding new variable
longitude_i*yeat_t*post_t
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ IMPACT OF POLITICAL SHOCKS ON MARKET ESTABLISHMENT
Many political changes may have affected market establishment, if such
effects are very strong, it will impair our argument that medieval universities
have a considerable contribution to commercial revolution.
Therefore, the authors identified several possible channels through
which political changes may affected the market establishment, and they
deleted samples that meet certain conditions, in order to cancel the effects by
those potential channels, then we can see if the former results hold
nonetheless.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
Cities loyal
to Avignon
have higher
reduction in
distance…
they may
drove some
of the trend
break that
we find
New lords has stronger incentive
to formalize existing markets for
symbolic purposes or to extracts
rents.
Cities in wars may use market
rights to hurt the markets of
competing cities.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
■ OTHER CHANNELS LINKING SCHISM AND ECONOMIC ACTIVITY?
The authors also considered the possibility that there were channels
other than the foundation of universities, through which the historical event
Papal Schism affected economic activity. So they undertook a falsification
exercise by examining trends of market establishment in England/Wales and
Italy, which were also exposed to the papal schism but experienced no
significant changes in the number of universities.
Due to the lack of panel data in England/Wales and Italy, they ran the
placebo test using the time series equation in the form of (4), and found no
significant changes in the level or trend of the rate of market establishment
rates. That supports the argument that the schism didn’t affect market
establishment in places that did not experience university establishment as a
result of the schism.
This has answered Question 4.
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A SIMPLE MODEL OF UNIVERSITY FOUNDATION AND MARKET ESTABLISHMENT
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UNIVERSITY TRAINING AND THE DEVELOPMENT OF LEGAL INSTITUTIONS
■ ROMAN LAW WAS REDISCOVERED AND TAUGHT IN
UNIVERSITIES
Europe’s Commercial Revolution occurred just as Roman law was
reestablished. In most medieval universities, both canon law and Roman law
were taught.
■ WHAT IS THE MERIT OF ROMAN LAW?
Before the rediscovery of Roman law, the preexisting system is
customary law, which is local, highly traditional, based on kinship and
superstition.
On the contrary, Roman law is an authoritative yet flexible system,
written, universally known across Europe.
Therefore, switching towards a legal system, which is broadly applied,
rule-based and written, such as Roman law, effectively reduced the
uncertainty merchants faced in economics transactions.
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UNIVERSITY TRAINING AND THE DEVELOPMENT OF LEGAL INSTITUTIONS
■ TRAINING AND CAREERS OF JURISTS IN THE GERMAN LAND
The authors find that among 2,000 students matriculated at the
University of Cologne between 1388 and 1400, 24% studied law. Fuchs
(1995) shows that 14% of Heidelberg graduates before 1450 were in law, for
Cologne this number is 13%. No precise number for Erfurt, but Coing (1964)
estimates that more students graduated in law from Erfurt than from Cologne
or Heidelberg.
Kuhn (1971) finds that in 1,627 students from Tübingen University from
1477 to 1534, around 20% served in public administration jobs. Other
secular jobs for law students include judges, notary and arbitrator.
Legally trained administrators and judges reduced the cost of
establishing markets; more predictable adjudication reduced the uncertainty
of contracting and engaging in commercial activity, increasing merchants’
demand for markets.
Question 5 has been answered.[41/44]
CONCLUSION
■ FROM GERMANY TO THE WHOLE EUROPE
We have test our theory using data from Germany, but can the
mechanism the authors suggest applied to Medieval Europe?
Research
Opinion
Cantoni and
The channel from universities to legal training, to careers
Yuchtman (2013) in public administration and Church administration was
clearly exhibited among the University of Bologna’s
medieval graduates.
Swanson (1979)
From the beginning of the 13th century the law graduates
of the French provincial universities dominated the
personnel of the French chancery.
Berman (1983),
DeLong and
Shleifer (1993),
Epstein (2000)
Public administrators, including those within the Church,
helped establish the political institutions that were crucial
to Europe’s medieval economic growth.
Question 6 answered.
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CONCLUSION
■ LET’S REVIEW THE CONCLUSION
Question 1 to 6 add up to the conclusion:
Medieval Universities played a causal role in expanding economic
activity.
■ FURTHER QUESTION TO ASK
However, this is not the end of story. One can compare this research to
Murphy, Shleifer and Vishny (1991)’s QJE paper The Allocation of Talent:
Implications for Growth. They argue that if the most talented people go to
productive sectors (e.g. as Engineers), the economic growth will be higher
due to their contribution to technology. Otherwise, if the smartest ones go to
unproductive sectors (e.g. as Lawyers), it is not optimal for the society
because they become rent-seekers.
[43/44]
CONCLUSION
■ FURTHER QUESTION TO ASK (CONT’D)
Are the research by Murphy et al contradictory to Contoni and
Yucheman’s? Is one of them wrong? If so, which one? Or are they both right?
If so, how could it be?
■ IMPLICATION AND FUTURE
This question is important because it determines the implication of the
paper we have just studied: How the mechanism through which legal
education has its overwhelming effects on economic growth depends on
times and area. Only when we know the answer can we decide on policies
about allocation of human capital.
Maybe at different stages of development, society demands for different
types of talents or abilities. And I think it will be an interesting topic to work
on.
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THANK YOU