DP15601 Wars, Taxation and Representation: Evidence from Five Centuries of German History

Author(s): Sascha O. Becker, Andreas Ferrara, Eric Melander, Luigi Pascali
Publication Date: December 2020
Keyword(s): fiscal capacity, institutions, medieval constitutionalism, wars
JEL(s): N13, P48, R11
Programme Areas: Public Economics, Development Economics, Economic History, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15601

We provide causal evidence for the role of conflicts in the development of representative institutions in Europe. Using novel data on the universe of German cities between 1250 and 1710, we show that involvement in wars resulted in city councils that were larger, had a higher probability of being elected by citizens, and a higher probability of guild representation. Additionally, conflicts led to a substantial long-term increase in local fiscal and spending capacity. This effect persisted well after the end of the conflicts: temporary war taxes were transformed into permanent sophisticated systems of taxation, while public spending was re-directed from military to civilian spending. We use the gender of the firstborn child of the best-connected local noble to instrument for conflict: a firstborn daughter increases the likelihood of conflict relative to a firstborn son.