Origins of the knowledge economy

It is commonly asserted that education is essential to supporting economic growth and improved living standards. And in modern contexts, there is considerable evidence of the gains from education to individuals and society. However, the historic evidence is rather more mixed.

The starting point for my research is Joel Mokyr’s idea that the general level of education of the population may matter less for growth and development than the specialised skills of a relative elite: the ‘upper tail’ of the human capital distribution. I focus specifically on the role of upper-secondary and tertiary-level education — what I define as ‘higher education’ — as a channel for the accumulation of this upper-tail human capital.

My dissertation presents a compilation of papers that examine both who pursued higher education, and how the skills of graduates contributed to economic and social development in the lead-up to and during industrialisation. The empirical setting for my analysis is nineteenth and early twentieth century Scandinavia, drawing on historic source material on the graduates of higher education in Denmark, Norway and Sweden.

Scandinavia provides an interesting case study for testing the upper-tail thesis. Already by 1800, Denmark, Norway and Sweden had (relative to much of the world) high rates of literacy and widespread access to basic education. Yet these countries were relatively poor and industrialised later than other countries with less-developed education systems. This observation gives rise to Lars Sandberg’s description of nineteenth-century Sweden as an ‘impoverished sophisticate‘.

While the average level of education was quite high, enrolment rates in higher education were limited. In the early 1800’s, only a small fraction of Danes, Norwegians and Swedes attended high school; higher education was an elite pursuit. Over time, however, access expanded: new high schools opened, new subjects were introduced, and new types of educational institutions were established.

Research scope

My dissertation thus considers two linked research questions: To what extent did changes in the provision of higher education increase access to education beyond a small elite in society? How did changes in the provision of and access to higher education influence Scandinavia’s development in the lead-up to and during industrialisation? Different dimensions to these questions are specifically examined in the four papers that comprise the dissertation.

The four papers draw on a mix of novel sources that shed light on the graduates of higher education. One set of sources is grade lists and related enrolment records. These provide an authoritative basis not only for identifying who graduated from higher education, but also what those students studied, and how they performed in their exams. This enables a more detailed analysis of human capital accumulation than is commonly available, in particular by allowing for differences in skills and grades.

Central to the final two papers in my dissertation are graduate biographies. In addition to recording information on graduates’ studies, the biographies outline the backgrounds of graduates — where and when they were born, and who their parents were — and their post-education careers. This permits analysis of the relationship between higher education and employment.

My research principally consists of econometric analysis: in most cases, using probit regression models to test probabilistic outcomes (for example, the likelihood of graduating given a range of individual and household characteristics). To construct my data, I employ a combination of artificial intelligence and machine learning techniques. In particular, the final two papers of my dissertation rely on detailed biographies of over 7000 thousand graduates. I process the biographical text using a large language model, and thereby extract key variables on graduates’ backgrounds and their careers.

Headline findings

Each paper in the dissertation has its own contextual setting, research question, data and results. However, based on the collective work across the papers, I draw three broad conclusions:

1. Through until (at least) 1929, higher education was an elite pursuit. Moreover, it did not become substantially less elite over the period.
2. From the latter part of the nineteenth century onwards, the demand for technical higher education increased, as is evident from rising graduate totals.
3. Higher education supplied skills that both supported institutional development and fostered technical progress.

The elite status of higher education in this historical context is not of itself surprising. The rapid expansion of high school and university access in Europe is typically associated with the post-WWII era. Nevertheless, industrialisation brought about significant changes in economic structure. As the figure below illustrates, the period I examine captures the transition from principally agrarian to industrial societies in Denmark, Norway and Sweden.

Despite the dramatic economic and social shifts, the composition of graduate cohorts — measured by the occupations of graduates’ fathers — was broadly stable. Throughout the period, around half of all students came from households where the father was employed in a ‘professional, technical and related’ or ‘administrative and managerial’ occupation: mostly priests, lawyers, doctors, teachers, and other state officials. While the data below related only to Norwegian high school graduates, the results I present in the individual papers show comparable trends across different countries and institutions.

This first conclusion is perhaps even more remarkable given the second finding. The annual totals of higher education graduates increased substantially from the late nineteenth century onwards. This was in part enabled by an increase in the number of institutions: new high schools, universities and equivalent institutions. But it was perhaps also driven by changes in the types of higher education that were offered.

The introduction of mathematical-scientific tracks in high school during the latter part of the nineteenth century represented a fundamental shift from the classical high school education, with its focus on languages, literature and history. These mathematical-scientific programmes quickly established themselves as the preferred choice of (especially male) high school students.

The expansion of advanced polytechnic education is also notable here: the Technical University of Denmark (DTU) was established in 1829, and produced very few graduates until the end of the century. However, with the opening of a new campus and a reorganisation of courses, DTU’s graduate totals surged from around 20 per year to over 150 per year by the 1920’s.

Industrialisation inevitably increased the demand for scientific and engineering skills. My third conclusion is that higher education provided an effective channel for meeting this demand. In the final paper of my dissertation, I show how polytechnic education in Denmark and Sweden contributed to entrepreneurial innovation. But I also emphasise that the traditional role of higher education — equipping the state apparatus with educated public officials — also improved institutional quality. These political, social and economic institutions also served as a foundation for Scandinavia’s growth and development.

A comma, not a full stop

After more than four years of effort, completing this dissertation is a major milestone. However, it would be premature to declare this the end of my work. Obvious extensions to this research would draw on the wealth of related sources that I have not yet used — covering additional years and institutions. Moreover, the richness of my source material offers near-limitless potential for analysis. In particular, by linking student records and biographies with population-wide data (for example, censuses and tax records), there is considerable scope to evaluate the returns to higher education over the long run.

No one, I suspect, really knows what they are getting themselves into when they embark on their doctoral studies. It is a long journey, filled with unexpected surprises and challenges. Looking back, I have much to be grateful for: the fantastic colleagues I have worked with, the raft of new skills I have acquired, and the privilege of being able to explore and analyse something I am genuinely interested in.