From Farmers to Merchants, Conversions and Diaspora: Human Capital and Jewish History

From the end of the second century CE, Judaism enforced a religious norm requiring fathers to educate their sons. We present evidence supporting our thesis that this change had a major influence on Jewish economic and demographic history. First, the high individual and community cost of educating children in subsistence farming economies (2nd to 7th centuries) prompted voluntary conversions of Jews that account for a share of the reduction from 4.5 to 1.2 million. Second, the Jewish farmers who invested in education gained the comparative advantage and incentive to enter skilled occupations during the urbanization in the Abbasid empire in the Near East (8th and 9th centuries) and they did select themselves into these occupations. Third, as merchants the Jews invested even more in education-a precondition for the mailing network and common court system that endowed them with trading skills demanded all over the world. Fourth, the Jews generated a voluntary diaspora within the Muslim Empire and later to Western Europe. Fifth, the majority of world Jewry lived in the Near East when the Mongol invasions in the 1250s brought this region back to a subsistence farming economy in which many Jews found it difficult to enforce the religious norm, and hence converted, as it had happened centuries earlier. (JEL: J1, J2, N3, O1, Z12, Z13) (c) 2007 by the European Economic Association.