In this paper, we provide systematic evidence of how historical religious institutions affect the rule of law. In a difference-in-differences framework, we show that districts in Pakistan where the historical presence of religious institutions is higher, rule of law is worse. This deterioration is economically significant, persistent, and likely explained by religious leaders gaining political office. We explain these findings with a model where religious leaders leverage their high legitimacy to run for office and subvert the Courts. We test for and find no evidence supporting several competing explanations: the rise of secular wealthy landowners, dynastic political leaders and changes in voter attitudes are unable to account for the patterns in the data. Our estimates indicate that religious leaders expropriate rents through the legal system amounting to about 0.06 percent of GDP every year.

Why do some societies have political institutions that support productively inefficient outcomes? And why does the political power of elites vested in these outcomes often grow over time, even when they are unable to block more efficient modes of production? We propose an explanation centered on the interplay between political and cultural change. We build a model in which cultural values are transmitted inter-generationally. The cultural composition of society, in turn, determines public-goods provision as well as the future political power of elites from different cultural groups. We characterize the equilibrium of the model and provide sufficient conditions for the emergence of cultural revivals. These are characterized as movements in which both the cultural composition of society as well as the political power of elites who are vested in productively inefficient outcomes grow over time. We reveal the usefulness of our framework by applying it to two case studies: the Jim Crow South and Turkey’s Gülen Movement.