published in: Journal of the European Economic Association, 2007, 5 (5), 885-926,
Since the Middle Ages the Jews have been engaged primarily in urban, skilled occupations,
such as crafts, trade, finance, and medicine. This distinctive occupational selection occurred
between the seventh and the ninth centuries in the Muslim Empire and then it spread to other
locations. We argue that this transition was the outcome of the widespread literacy among
Jews prompted by an educational reform in the first century CE. Based on the growing nexus
between education and Judaism in the first half of the millennium, we build a model in which
Jewish men choose education, occupation, religion, and location. The model predicts that
when urbanization expands (as it did in the Muslim Empire), Jews move to new cities due to
their comparative advantage in urban, skilled occupations. Furthermore, before urbanization
a proportion of Jewish farmers are predicted to convert to other religions. The predictions of
the model regarding conversions, migrations, and reduction in the size of the Jewish
population are consistent with the historical evidence about the first millennium provided by
the historians. Hence, our study presents evidence for the long-term economic implications of
changes in social norms.
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