Education and industrialisation: The importance of a skilled 1%

FEW would challenge the proposition that human capital is fundamental to economic growth. Yet much evidence suggests that during what is arguably the most important era of growth—the Industrial Revolution—human capital had little bearing on economic development. Primary school enrolment in Britain, the cradle of industrialisation, was a mere 11% as late as 1850. Scandinavia, in contrast, lagged behind economically for a long time in spite of having achieved close to full literacy at the beginning of the 19th century. In a new paper, Mara Squicciarini of Katholieke Universiteit Leuven and Nico Voigtländer of the University of California, Los Angeles, attempt to resolve this conundrum by dividing human capital into two categories, one that had an impact on the Industrial Revolution and one that did not.The authors reckon that “upper-tail knowledge” rather than “average human capital” is what drives industrialisation. This matters presumably because while worker skills, such as literacy and primary education, boost productivity by utilising existing technologies, it is the skills held by top engineers and entrepreneurs that enables a society to innovate and foster the type of rapid technological progress that characterised the industrial revolution. Since education and literacy are two of the most common measures used in the academic literature this distinction would, if …

Link to article: www.economist.com/blogs/freeexchange/2014/07/education-and-industrialisation?fsrc=rss

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