Counting Ramadan

The Economics of Religion

Muslims offer the first Friday prayers of the holy month of Ramadan at a mosque in the northern Indian city of Allahabad, July 4, 2014. Jitendra Prakash / Reuters

Every year millions of Muslims in every region of the world fast from sunrise to sundown for the holy month of Ramadan. To accommodate this practice, businesses in many Muslim countries grant their employees reduced working hours. In the United Arab Emirates, for example, the work day is shortened by two hours, by law, and in 2012, the Minister of Labor imposed a country-wide ban on outdoor work between noon and three o'clock in order to protect fasting laborers from increased susceptibility to heat stress. To understand how Ramadan affects the economy, Public Policy Professors Filipe Campante and David Yanagizawa-Drott at the Harvard Kennedy School examined over six decades of data.

In their paper, Campante and Yanagizawa-Drott establish that Ramadan has a negative economic impact. To determine cause and effect, rather than mere correlation, they exploit a unique variation in how Ramadan is practiced worldwide: Because the number of daylight or

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