Economic Prosperity and Religion Nexus in Africa: Analysing the Innovation and Labor Market Channels

Abstract This study contributes to the literature on economic growth and religion by analyzing innovation and labor market channels in Africa. We adopt an innovative approach to controlling causal inference from religion to economic prosperity on the one hand and from religion to innovation and labor market participation on the other hand. Our approach involves using instrumental variables and addressing measurement errors and business cycle effects. Consistently, we demonstrate that there is a trade-off between the proliferation of the Christian religion and economic prosperity, and this finding is driven by the negative incentive to participate in labor markets and innovative processes among religious actors. Our findings underscore the significance of religion/culture in explaining innovation, labor market participation, and economic prosperity. JEL Codes: O11, O47, O55, A14, B55