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From Farmers to Merchants, Voluntary Conversions, and Diaspora:

A Human Capital Interpretation of Jewish History

Maristella Botticini & Zvi Eckstein

Boston University, Tel Aviv University, Universita’ di Torino U. of Minnesota, CEPR Federal Reserve Bank

of Minneapolis CEPR

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Question

• “Can an exogenous change in a religious/social norm have long-term economic consequences?”

• Jewish economic history in the past two thousand years enables us to answer this question.

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Three patterns to be explained

• Occupational selection (750-900 CE, Muslim Empire) Jews left farming and entered urban, skilled occupations [JEH paper]

• Demographics 200-600 CE: Jewish population decreased (4.5 to 1.5 M)1250-1500: Jewish population decreased (1.2 to 0.8 M)

• Demographics (800-1200 CE)The migrations of Jewish *skills* within the Muslim Empire and to western Europe

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Occupational Selection (750-1200 CE)

Time Location Farmers Craftsmen Merchants

0-400 CE Eretz Israel 80-90% few few

Mesopotamia 80-90% few few

Egypt 70-80% some some

Roman Empire 70-80% few few

400-638 Eretz Israel 70-80% some some

Mesopotamia 60-80% many some

Egypt ?? ?? ??

Byzantine empire ?? ?? ??

638-1170 Eretz Israel 20-30% many many

Muslim Empire 10-20% many many

Western Europe 5-10% many many

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Question Is there a common factor

behind the three historical patterns?

Our answer

An exogenous change (1st – 2nd century CE) in the religious norm which defined Judaism brought these long-term economic and demographic outcomes. The destruction of the Temple and the raise of Pharisees.

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The Educational Reform

200 BCE – 70 CE 70 -135 CE 135 – 200 CE

Many religious groups

Pharisees: stress the study of Written and Oral Torah (Law).

Temple destroyed

by Titus - Roman army.

Pharisees became religious leaders.

Christianity separated from Judaism.

The Mishna (200 CE): 6 volumes of rules of daily life for Israelis farmers!

64 CE-- religious norm: fathers must send sons to school to learn the Torah.Exogenous?

Sacrifices replaced with study of the Torah in synagogue

Leadership of rabbis

AFTER 200 CE:

Talmud and am ha-aretz (illiterate) were considered outcast.

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Main Predictions of Economic Theory

• Cost of education for farmers with no return to education cause low ability, low income farmers to convert – in the long run Judaism can’t survive in a farming society

• Jews had a comparative advantage in occupations and locations where return to literacy and communication is high.

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A simple model of education and conversions of farmers

• Two-period overlapping generations model with no pop. growth.

• 1st period: the child receives education (es)

• 2nd period: the adult decides his religion (j,n), and child's education

• Before 200 CE: Jews and non-Jews have same level of education and income.

• After 200: change in Jewish religious preferences.

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• Jewish individual: uj(c, es; e, x) = log c + x(e+1)es - εh

• Jewish individual who converts: ujn(c, es; e, x) = log c – πx

• Non-Jewish individual: uⁿ(c, es; e, x=0) = log c

• x (>0): exogenous taste parameter

• Educational reform within Judaism: interaction of x with es and e.

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• Jewish father must provide at least emin = 1 to his son. • Cost of child’s education: γ(es)θ γ >0, θ>1.

• At community level: – operating costs of synagogue, teacher's salary, cost

of books

• At individual level: – child's intellectual ability – opportunity cost of the time the child spends in school

• Education does not affect productivity and earnings in farming.

• Budget constraint: c + γ(es)θ + τrF ≤ wF

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Testable implications on children’s education

es ∗ = 0 if x(e+1) < (γθ) / (wF – γ - τjF) and

if x(e+1) < log [(wF – τjF)/ (wF – γ – τjF)] -

es∗ ≥1 otherwise, and es

∗ solves the equationx(e+1) = (γθ(es)θ-1) / (wF - γ(es)θ - τjF)

• At the community level: – γ large in small Jewish communities. – negative aggregate economic shocks lower wF

• At the individual level: – families with low-ability children– families with high opportunity costs of sending

children to school – fathers with low x or low e.

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Jewish farmers: conversion

• Jewish farmer converts if log(wF - γ(es

*)θ - τjF) + x(e+1)es* - εh < log(wF - τnF) - πx

Suppose τjF = τnF

1. Jewish farmers who do not educate their children, convert if ε ≥ πx ≥0.

2. Jewish farmers who educate their sons do not convert even if π = 0.

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Testable implications on conversions and Jewish population dynamics

• Because of heterogeneity across individuals (x, γ, θ, e), some Jewish farmers do not educate their children and convert.

• Also, more conversions when aggregate economic conditions are bad (low wF, high τrF) and in small communities (high γ).

In the long-run: Judaism cannot survive in a subsistence farming society as Jewish farming population is decreasing through conversions. Before 8’th CE most Jews are farmers.

• Reduction in Jewish population can be halted if Jews could find an Occupation that provides high return to their investment in education/literacy – trade and urban occupations – the merchants society. How ?

1. with increased urbanization and the expansion of trade – from 9 CE 90% of Jews live in cities.

2. with migration as traders to better reach better earnings – From 9 CE Jews are spread all over the globe.

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Jewish farmers before 8th century: children’s education

• In a subsistence farming economy, the investment in children's education is a religious sacrifice with no economic return.

• Safrai (1994): in Roman Palestine– food expenses amounted to about 40-50 percent of a family's

total expenses.– taxes took an additional 30 percent– little was left to buy other items such as clothing, books, and

paying for the teacher's salary.

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Cost of living (in denarii), 1st-3rd centuries C.E.

Items in a household budget Eretz Israel

Egypt Babylon

Monthly wage of an agricultural worker

24-48 4-32 72-96

Monthly wage of an urban skilled worker

48-72 6-40

Monthy wage of a boy on farm work --- 2-10

Monthly bread expenses (family of four)

10-20 5-10

Cattle (ox or cow) 100-200 15-100

Suit/cloak 30 ---

Monthly rent of a house 4 ---

Book 200 --- 80-120

Source: Sperber (1965; 1967)

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• Despite being very costly, primary education became widespread in the Jewish communities from 3rd to 7th century.

• EVIDENCE?

• Many rulings and discussions in Talmud

(see our JEH paper). Yarchi-kalaa in Babylon.

• The wealth of archeological findings on synagogues (new HERE).

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Sample of Synagogues, ca. 200-500

Century Locations

3rd Bar’am, Gush halav, Horvat, Horvat Shema, Kefar Kana, Nevoraya, En-Gedi, Eshtemoa

3rd -4th Chorazin, Gush Halav, Hammat Gader, Hammath Tiberias, Khirbet Shema, Maoz Hayyim, Meiron, Nabratein, Rehov, Horvat Sumaqa, Horvat Rimmon

4th Arbel, Capernaum, Horvat ha-Amudin, Meroth, Beth Alpha, Beth Shean, Maoz Hayim, Gaza, Horvat Susiya, Naaran, Zuminra

3rd , 5th Anim, Aphik, Dabbura, Kefar Hananiah

5th Assalieh, En Neshut, Horvat Kanef, Katzrin, Huseifa, Hirbet Amudin, Yaifia, Sepphoris

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Jewish farmers before 8th century: conversions

0-65 CE 66-130 135-300

6th cent

Eretz Israel 2.5 1.7 0.7 0.2

Mesopotamia 1 1 1.2 0.8-1

Egypt 1 0.1 v few v few

Syria many many some few

Asia Minor, Balkans many many some few

Western Europe some some some v few

Total Jewish Pop 4.5-5 3-3.5 2-2.5 1.5

Total Population 59 59 55 48

J as % of total pop 7% 6% 4.5% 3%

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Jewish farmers before 8th century: conversions

Eretz Israel

• Uneducated, poor Jews were early converts to Christianity

• Samaritans: Samaritan farmers converted to Christianity

Mesopotamia

• Conversions of Jews to Christianity occurred. The size of the Jewish population there decreased despite migrations from Eretz Israel.

________________________________________________________• Evidence that some uneducated Jews did not convert:

the ammei ha-aretz in Mishna and Talmud.

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Occupational Transition: 750-900 CE

• Given stagnant economies in 4th-7th centuries, educated Jewish farmers could not find skilled occupations.

• But in 8th-9th centuries, urbanization expanded in newly established Muslim Empire.

• Occupational transition took 150 years. By 900, almost all Jews in Iraq, Persia, Syria, and Egypt, had urban occupations.

• Occupational selection remained distinctive mark thereafter.

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Urbanization in the Near East(in thousands)

8th – 10th centuries Total Population Jewish Population

Baghdad 600—1,000 200

Samarra 500 7.5

Basra 200-600 10-50

Cairo 300 10

ca. 1170

Palermo 150 7.5

Paris 110 1.5

Seville 80 many

Venice 70 ?

Granada 60 many

Cordoba 60 many

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A model of education and conversion of merchants

• Merchant's budget constraint:

c + γ(es)θ + τrM ≤ wF(1 + Aesα e1-α)

Education• Jewish merchants invest more than non-Jewish

merchants in children's education. WHY?

Conversion

(i) If τjM = τnM, no Jewish merchant will convert.

(ii) Over time, the proportion of merchants will increase.

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Education: tons of evidence from Geniza and Responsa

No or few conversions between 800 and 1200.

6th century 8th century ca. 1170

Eretz Israel 0.2 few 0.002

Iraq and Iran 0.8-1 0.8 0.8

Egypt v few 0.004 0.012

Syria few few 0.015

Balkans, East Europe few few 0.047

Western Europe v few v few 0.103

Total Jewish Popul 1.5 1-1.2 1.1.2

Total Population 48 51 75

J as % of total pop 3% 2% 1.6%

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Voluntary Diaspora: The migrations of Jewish *skills*, ca. 800-1250

• Main insight: the educational requirement in Judaism can survive in the long run only if the Jews can find occupations with high returns to their investment in education.

• The migrations of Jewish people– within the Muslim Empire (ca. 800-1000)– to western Christian Europe (ca. 900-1250)

support this argument.

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Migrations within the Muslim Empire (800-1000): Voluntary and Free

• Jewish craftsmen and merchants freely settled in Egypt, North Africa. Muslim Spain: the “golden” age.

Migrations to western Europe (900-1200): Voluntary and Regulated

• Jews migrated to France, Germany, and England upon invitation by local rulers. Wealthy communities in hundreds of towns.

• Because of their high human capital and skills, Jews were viewed as essential for economic growth to the point that local rulers competed to have some Jews settle in their towns.

• No restrictions on Jewish economic activities.

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Sample of Medieval ChartersCountry City Year of

charterOwn Land

Trade Moneylending

Spain Barcelona 1053-1071 yes yes yes

Tudela 1116 silent yes yes

Toledo 1222 yes yes yes

Valencia 1250 yes yes yes

France --- 820 yes yes silent

--- 1190 silent silent yes

England --- 1120, 1170 yes yes yes

--- 1275 yes yes no

Germany Speyer 1084, 1090 yes yes yes

Worms 1074 silent yes silent

Worms 1090, 1157 yes yes yes

Ratisbon 1182, 1216, 1230

yes yes silent

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The height of the Jewish Diaspora

From the travel itinerary of Benjamin de Tudela (1170):

• In Muslim Iraq and Iran, 80 percent of world Jewry.

• Muslim Spain: tiny and wealthy Jewish communities in more than 150 cities and towns.

• France, England, and Germany: small and prominent Ashkenazi Jewish communities lived in more than 160 locations.

• Plus, tiny Jewish communities all over Italy, Bohemia, eastern Europe, Turkey, the Middle East, Egypt and North Africa, all the way to central Asia, China, and India.

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SOMETHING INTERESTING

• Contemporary Jewish populations show a closer genetic link to Jews from far away locations than to their neighboring non-Jewish populations.

• Especially the Ashkenazi Jews of eastern Europe are genetically closer to Jews from the Middle East and North Africa, as well as to other Middle Eastern non-Jewish populations, than to eastern European non-Jewish populations.

• This provides additional and independent evidence that there were no significant conversions to, and out of, Judaism once the Jews became merchants and migrated to western and then eastern Europe, and it clearly shows that the Jews all migrated from the same original location.

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The Mongol Shock --- Could the Jews be farmers?

• The Mongols invaded Persia and Iraq in 1256-60 and destroyed the economy.

• Because of massacres, starvation, epidemics, total population was reduced by half.

• Jewish population shrank from about 800 thousands to about 100 thousands.

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The Mongol Shock

1170 1300 1490

Eretz Israel 0.002 v few v few

Iraq and Iran 0.8 ? 0.1

Egypt 0.012 ? 0.005

Syria 0.015 ? 0.007

Balkans, Eastern Europe 0.047 0.065 0.090

Western Europe 0.103 0.385 0.510

Total Jewish Population 1-1.2 0.8-1 0.7-0.9

Total Population 75 95 87

Jewish as % of total pop 1.6% 1% 1%

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• No evidence that Iraqi Jews migrated in large numbers to western Europe (REMEMBER: migrations to Europe were regulated).

• Death rate from starvation and epidemics similar to local population.

• Jewish death toll from massacres by Mongols was lower.

• The much larger reduction was the outcome of voluntary conversions.

These conversions among low-income Jews when the economy became again a subsistence farming support our main insight.

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Why do we work on this topic?

• Because it is fun (and we were too curious to know…)

• What’s next?

• From merchants to moneylenders in medieval Europe …..Restrictions on Christians? NO!

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Occupational Selection (750-900 CE)

Time Location Farmers Craftsmen Merchants

0-400 CE Eretz Israel 80-90% few few

Mesopotamia 80-90% few few

Egypt 70-80% some some

Roman Empire 70-80% few few

400-638 Eretz Israel 70-80% some some

Mesopotamia 60-80% many some

Egypt ?? ?? ??

Byzantine empire ?? ?? ??

638-1170 Eretz Israel 20-30% many many

Muslim Empire 10-20% many many

Western Europe 5-10% many many

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Jewish Population Dynamics

0-65 CE

66-130

135-300

6th cent

8th cent

1170 1300 1490

Eretz Israel 2.5 1.7 0.7 0.2 few 0.002 v few v few

Mesopotamia 1 1 1.2 0.8-1 0.8 0.8 ? 0.1

Egypt 1 0.1 v few v few 0.004 0.012 ? 0.005

Syria many many some few few 0.015 ? 0.007

Asia Minor, Balkans many many some few few --- --- ---

Balkans, E. Europe --- --- --- --- ? 0.047 0.065 0.090

Western Europe some some some v few v few 0.103 0.385 0.510

Total Jewish Pop 4.5-5 3-3.5 2-2.5 1.5 1-1.2 1.1.2 0.8-1 0.7-0.9

Total Population 59 59 55 48 51 75 95 87

J as % of total pop 7% 6% 4.5% 3% 2% 1.6% 1% 1%