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Education and Catch-Up in the Industrial Revolution

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Abstract

Research increasingly stresses the role of human capital in modern economic development. Existing historical evidence -- mostly from British textile industries -- however, rejects that formal education was important for the Industrial Revolution. Our new evidence from technological follower Prussia uses a unique school enrollment and factory employment database linking 334 counties from pre-industrial 1816 to two industrial phases in 1849 and 1882. Using pre-industrial education as instrument for later education and controlling extensively for pre-industrial development, we find that basic education is significantly associated with nontextile industrialization in both phases of the Industrial Revolution. Panel data models with county fixed effects confirm the results. (JEL I20, J24, N13, N33, N63)

Citation

Becker, Sascha O., Erik Hornung and Ludger Woessmann. 2011. "Education and Catch-Up in the Industrial Revolution." American Economic Journal: Macroeconomics, 3(3): 92-126. DOI: 10.1257/mac.3.3.92

Additional Materials

JEL Classification

  • I20 Education and Research Institutions: General
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • N13 Economic History: Macroeconomics; Growth and Fluctuations: Europe: Pre-1913
  • N33 Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: Pre-1913
  • N63 Economic History: Manufacturing and Construction: Europe: Pre-1913
  • Posted by THEODORE R BRETON
  • Posted on 11/21/2012 1:52:16 PM
This is a path-breaking article with respect to the role fo education in industrialization. But I disagree with your statement on P. 99 that a leader-follower relationship requires a specification in which the level rather than the change in human capital affects growth. Your findings are entirely consistent with the augmented Solow, in which the change in human capital drives growth. To see this just take the marginal product of physical capital in this model, and you will see that it is a function of human capital. This means that as human capital rises, MPK rises, and investment in K follows. This result occurs because human capital and physical capital are complementary in this model, which means that each type of capital has an external effect on the productivity of the other type of capital. See Breton, 2012, Were Mankiw, Romer, and Weil Right? Macroeconomic Dynamics
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