NBER WORKING PAPER SERIES

SCHOOL, WHAT IS IT GOOD FOR? USEFUL HUMAN CAPITAL AND THE HISTORYOF PUBLIC EDUCATION IN CENTRAL EUROPE

Tomas CvrcekMiroslav Zajicek

Working Paper 19690http://www.nber.org/papers/w19690

NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts Avenue

Cambridge, MA 02138December 2013

We thank Jeremy Atack, Howard Bodenhorn, Timothy Guinnane, Alex Klein, Naomi Lamoreaux,Peter Lindert, Melinda Miller, David Mitch, Joel Mokyr, Aldo Mussachio, Steven Nafziger, the participantsof Clemson Public Economics Workshop and of the Yale Economic History Workshop for their usefulcomments. All errors are our own. The views expressed herein are those of the authors and do notnecessarily reflect the views of the National Bureau of Economic Research.

NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies officialNBER publications.

© 2013 by Tomas Cvrcek and Miroslav Zajicek. All rights reserved. Short sections of text, not to exceedtwo paragraphs, may be quoted without explicit permission provided that full credit, including © notice,is given to the source.

School, what is it good for? Useful Human Capital and the History of Public Education inCentral EuropeTomas Cvrcek and Miroslav ZajicekNBER Working Paper No. 19690December 2013JEL No. H52,I25,N3,N43

ABSTRACT

The rise of education has featured prominently in the debate on the sources of modern long-term economicgrowth. Existing accounts stress the positive role of public education and the importance of politicalsupport for its provision. We argue that such an explanation for the spread of schooling is probablya poor fit for many nations’ schooling histories and provide an example, using detailed data on schoolingsupply from the Habsburg Empire. We show that while economic development made schooling moreaffordable and widespread, the politics of demand for schools was not motivated by expectations ofeconomic development but by the ongoing conflict between nationalities within the Empire. We findthat public schools offered practically zero return education on the margin, yet they did enjoy significantpolitical and financial support from local political elites, if they taught in the “right” language of instruction.Our results suggest that, for some countries at least, the main link, historically, went from economicdevelopment to public schooling, not the other way round.

Tomas CvrcekDepartment of EconomicsClemson University213 Sirrine HallClemson, SC 29634and NBERtcvrcek@clemson.edu

Miroslav ZajicekKatedra institucionální ekonomieNárodohospodá�ská fakultaVysoká škola ekonomická v Prazenám. W. Churchilla 4130 67 Praha 3miroslav.zajicek@vse.cz

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1. Introduction

Moderneconomicgrowthhasbeencorrelatedwithconcurrentincreaseinschoolingand

humancapitalaccumulation.IthasbeeninvestigatedinnumerousBarro‐stylecross‐sectional

regressionsandproposalsregardingtheprovisionofschoolingcountamongcorepolicy

recommendationsissuedtodevelopingcountriesaroundtheworld(Sala‐i‐Martin,1997).The

strongcorrelationbetweenhumancapitalandgrowthappearsnotonlyinthecross‐sectionbut

alsoacrosstime.Ithasbecomeanintegralpartoftheoreticalmodelingofindustrialization,long‐

termgrowthandtheaccompanyingdemographictransition(Galor,2011).

Thereislesscertaintyabouthowthehumancapitalisaccumulatedandwhatkindofhuman

capitalexactlymattersforgrowth.Formalschoolinghaslongbeenconsideredoneofthemost

efficientchannels(Easterlin,1981).Thislineofargument,recentlyrevisitedbyLindert(2004),

GoandLindert(2010),MariscalandSokoloff(2000)andothers,seesmoderngrowthasa

consequenceof(amongotherthings)theriseofnationalpublicsystemsofeducationwhich

themselvesweretheproductofincreasedpoliticalvoiceand,eventually,electoralsupportfor

tax‐basedschooling.Oncloserinspection,anyofthesecausallinksbecomesmorecomplicated

(Mokyr,2013).WhileBeckeretal.(2009)claimthatPrussiacaughtupwithUKonlythanksto

herschools,Mitch(1999)arguesthatBritain’sindustrializationwasorthogonaltoher

educationalsystem.Sandberg(1979)citesSwedenasacaseof“impoverishedsophisticate”

wherehumancapitalreportedlystoodentirelyoutofproportiontothecountry’slevelofincome.

Asforthelinkfrompoliticalvoicetoeducation,theimpulsefornation‐wideeducationmaycome

(andhascomeinmanyinstances)notfromsavvyvotersbutfromtherulingeliteswhose

motiveshadmoretodowithpoliticalcontrolthaneconomicdevelopment(VanHornMelton,

1988).Evendemocraticpoliticsmustcontendwithquestionsaboutwhomayormaynotenroll,

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whopaysfortheschools,whatistobetaughtanditisfarfromobviousthattheanswerhas

alwaysbeen“more,better,broader”(Naidu,2012;Palma&Reis,2012;Troen,1975).

Weaimtointroducemorenuancetotheargumentbyinvestigatingthesedetailsofpublic

educationdecisions.OurresearchquestionslieattheheartoftheEasterlin‐Lindertstory.Using

datafromtheHabsburgEmpire,weask:howwellwasitseducationalsystemrespondingto(and

therebyaiding)economicdevelopment?Howdidtheprovisionofschoolinginfrastructure

interactwiththeEmpire’seconomicdevelopment?Howimportantwaseducationalpoliticsvis‐

à‐viseconomicfactors?Howdidindividualsrespondtothepublicschoolingprovisionandtothe

localeconomicdevelopmentinmakingtheirdecisionsaboutinvestinginhumancapital?In

contrasttotheEasterlin‐Lindertstoryofcredit‐constrainedbutnewlyenfranchisedpoor

parentswiselyvotingthemselvesmorepublicschoolprovisiontobefinancedbystingyelitesto

furthertheeconomicfortunesoftheirchildrenandtheircountry,wedescribeasystemwhere

thelocalelitefoistsapolitically‐motivatedandeconomicallyirrelevanteducationonlukewarm

masseswhilemakingthempayforitmostlyoutoftheirownpockets.1Ourhypothesisisnotnew

(Lindert,2004:100‐103)but,asfarasweareaware,oursisthefirstattempttoempiricallytest

itusinghistoricalstatisticalevidence.

2. Explainingtheriseofschooling

Afrequentpointofdeparturefortheliteratureontheprovisionofschoolingandeconomic

growthisthehighcross‐sectionalvariationamongnationstates(Easterlin,1981).Lindert

(2004:87‐88)opensbynotingthatBritain,theleaderinschoolenrollmentinearly19thcentury,

wasovertakenby1880byFranceandGermany(Prussia).Hisexplanationisthatforawidely

1Easterlin(1981:10‐11),citingtheexampleofChurch‐controlledSpanisheducationalsystem,isawareofthefactthatnotallkindsofformalschoolingareequallyuseful,yethestillseestheriseofschoolingprimarilyinthecontextofdemocratizationofopportunityandofthepoliticallife,notingthatabsolutemonarchiesareusuallysuspiciousofmasseducation’ssubversivepotential.

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availableschoolingsystemtodevelop,threeingredientshadtocometogether:(i)local

autonomysothatlocaldecision‐makerscouldappropriatelyrespondtolocaleconomic

developments,(ii)politicalvoice,i.e.amechanismwherebybroadpublicsupportfortax‐based

schoolingcouldbeconvertedintoactualpolicy,and(iii)low‐costprovisionwhichamountedto

cheap,abundantteachingstaff.Thereasonwhyschoolingalmostalwaysendedupbeingpublicly

financedinspiteofbeingamongthemostprofitableprivateinvestmentswasthatmostofthe

populationwascredit‐constrainedandpositiveexternalitiesweretooweaktointerestmoneyed

localelitesingeneratingcriticalmassofschoolingthroughphilanthropicactivity.Theargument

wasfurtherdevelopedinGoandLindert(2007,2010)whereitwastestedonenrollmentand

schoolingdatafromUScensusesof1840and1850.Thiscounty‐levelanalysisusedinformation

onvotescastinpresidentialelectionsandpropertyrestrictionsoneligibilitytostatelegislatures

asameasureofpoliticalvoiceandshowedapositiveeffectofpoliticalvoiceonenrollmentand

onpublicspendingperpupil.StudiesinsimilarveinhaveappearedorareunderwayforBritain,

Brazil,Russia,IndiaandChina(Mitch,2012;Chaudharyetal.,2011;Musacchioetal.,2012).

Onerecurringproblemthatthesestudiesencounteristhattheyhavetoworkaroundalack

ofsuitablereliabledata.Ananalysisofschoolingprovisionwouldideallyrequiredatathatare

bothsufficientlybroadinscopetoencompassallthenecessaryeconomic,politicaland

educationalindicatorsandsufficientlydetailedgeographicallysoastocapturethelocal

variation.Asitstands,educationalstatistics(enrollments,attendancerecords,age‐schooling

profiles)areoftenunreliableorincomplete;economicstatistics,suchasGDPpercapitaorreal

wages,rarelyexistonthesub‐nationallevel;andmeasuresofpoliticalvoicearehardto

constructandinterpret.Asaresult,bothChaudharyetal.(2011)andMusacchioetal.(2012)

havetostayattheleveloffederalstatesorcorrespondingunits,whichisaconsiderablygreater

levelofaggregationthanGoandLindert’s(2010)UScounties.GoandLindert(2007,2010),on

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theotherhand,havenoeconomicvariablesonthelocalcountylevelandgiventhatthewhole

education‐growthnexusisriddledwithendogeneityanyway,theyproposetosidesteptheissue

andestimatethedemand(andsupply)ofeducationinreducedform.

Thereisafurtherissuewithmeasuresofpoliticalvoice.Go&Lindert’s(2010)choiceofvotes

castinpresidentialelectionsmakessenseinthecontextofAmericanpoliticalinstitutionsbutfor

mostcountriessuchmeasureistoorestrictive,ifitexistsatall.ManyEuropeancountriesatthe

timeofIndustrialRevolutionhadscarcelyanydemocraticinstitutionsandthevariationin

suffrage,whereitexisted,wassmallacrosslocalities.Thisdoesnotmeanthatvariousspecial

interestsandsegmentsofpopulationhadnowaytovoicetheirconcerns;itdoesmean,however,

thattheirpoliticalvoicewasmuchlessformalizedandthusmuchhardertomeasure.

Howexactlythatpoliticalvoicewouldshapeeducationalpoliciesisalsofarfromobvious.The

citedstudiesusuallyposittheissueintheformofadichotomybetweeneliteswhowere

ambivalentabouteducatingthemassesandstronglyopposedtohavingpayforitandthegeneral

population,whichwoulddemandmoreeducationalinfrastructure,ifonlyithadmorepolitical

clout.Musacchioetal.(2012),forexample,showthatexogenouspositiveshockstovarious

statesoftheBrazilianfederationhaddifferentialimpactonlocalpublicspendingoneducation

dependingonwhetherthestate’sinstitutionsweremoreorlessdemocratic.Similarly,

Chaudharyetal.(2011)blamelowenrollmentratesinearly20thcenturyBRICsonabsenceof

masspoliticalvoiceandcorrelatetheprovisionofschoolingwiththecharacteristicsoflocal

eliteswhodidhavepoliticalvoice.Butinmanycases,amongwhichtheHabsburgEmpireisone,

theoriginalandcontinuingimpetusforthespreadofprimaryschoolingcamedecidedlyfromthe

topofthepoliticalhierarchy.PalmaandReis(2012),usingPortugalastheirexample,gosofara

toarguethatanauthoritarianstatemaybe,forvariousreasons,moreeffectiveinachieving

literacythanarepublicanregime.Inothercases,thedichotomybetweencentralizationand

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decentralizationisfalse,asmanyeducationalsystemssettledforsomehybridarrangement.Such

wouldbethecaseinPrussia(aswellastheHabsburgEmpire)wheretheoversightovercontent

ofeducationwasrelativelycentralizedandtightlycontrolledwhiletheschoolfinancingwas

local.Undersuchcircumstances,thelocalpopulardemandformoreeducationalinfrastructure

willlikelydependonwhatkindofeducationthestatedeemsallowable.Ficker(1873)

documents,forexample,thatforthewholefirsthalfofthe19thcentury,theAustriangovernment

pushedforthespreadofprimaryschoolingbutresistedthegrowthofsecondary,particularly

technical,schooling.

Allthingsconsidered,notalldemandforeducationtakestheformofpublicorpolitical

action,nordoesapoliticalactivitynecessarilyreflectwidespreadindividualdemandamongthe

localpopulation.Ourcontributionistoattempt(i)toseparateindividualdemandformore

education,drivenpresumablybyrisingreturnstoeducation,fromthepublic/politicaldemand

formoreeducationalfacilitiesand(ii)inanalyzingthepublicdemandforeducational

infrastructure,toseparatetheinfluenceofeconomicdevelopmentfromthatofpolitical

clout/voice.

WeexploittherichdetailofschoolinginformationintheHabsburgschoolcensusof1865and

combineitwithdataonlocaleconomicdevelopment,suchasindustrialemployment,local

railroadaccessanduseofsteampower.Thedescriptivestatisticsfromtheschoolcensusfor

relevantvariablesarereportedinTable1.Notallprovincesreportedthefullslateofvariables.

Thosethatdidwecall“coreprovinces”–theyhappentobetheones,whichhavelivedunderthe

HabsburgsceptersinceatleastthelateMiddleAges(seeFigure1).2Theunitofobservationisa

2Incontrast,Galicia,BukowinaandDalmatiacameundertheHabsburgrulebetweenthePartitionofPoland(1772)andthePeaceofVienna(1815).Wethereforecallthesethe“newprovinces”.WealsohavenodataonHungaryandtherestoftheeasternhalfoftheEmpire(Transleithania).

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schooldistrict–anaveragedistrictencompassedanareaofabout363km2andwasahometoan

averageof3.036childrenaged6‐12.3

[Figure1here]

[Table1here]

Wealsohavedataonallsecondaryschoolswithintheempire,soastoaccountforthatpart

ofthereturnstoprimaryschoolingthatconsistedinenablingastudenttocontinuewithhis(but

nother!)education.Welinkoureducationdatawithinformationonlocalethniccompositionto

capturethepoliticalaspectoftheproblem:sinceeducationcontentwascentrallydetermined

andschoolprovisionandattendancewerecompulsorybylaw,thelanguageofinstructionwas

education’smostprominentfeatureoflocalpoliticalimport.4Weusethisfactortotestthe

importanceofpoliticalvoiceinschooling.

Wemergedthisschoolingdatasetwithinformationonthestructureofemployment,

containedinthe1869census.Thisgivesusshareofworkersemployedinservices,agriculture,

severaldifferentsectorsofindustry,aswellasthosewhodidnotreportanyoccupation.5Weuse

itasourmeasureofeconomicdevelopmentandasameasureofthehumancapitaldemand

arisingfromthelocallabormarketinindividualschooldistricts.

3. EducationintheHabsburgEmpirecca1865

Fromthestart,thespreadofprimaryeducationthroughtheEmpirewasshapedby

governmentpolicy.Theschoolinglawof1774wasthefoundationalactofsystematicprimary

3Consideringthattheseagecohortsusuallyrepresentabout13‐14%ofthetotalpopulation,weinferthattheaveragedistricthadabout22–24.000inhabitants.4Otheraspects,suchascontentandteachingmethods,weredeterminedcentrally,notlocally,andlocalreligiousvariationhadceasedtobeapoliticalmatter,giventhatschoolcurriculumallowedforseparatereligiousinstructionforProtestantchildren.5The1869censusunfortunatelydoesnotdifferentiateemploymentbygender,reportingonlythetotalineachlocationandsector,sowesupplementthisinformationbyusingthe1880censusfigures.

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schooling.Itintroducedseveralbasicfeaturesthatsurviveduntilthenextmajorreformof1869,

suchasthe6‐yearcompulsoryschoolingforbothboysandgirlsaged6to12,thestresson

religionandthetriviumineducation,thedistinctionbetweentwo‐gradecountryschoolsand3‐

or4‐gradetownschools,thecompulsorycertificationofteachersandthestrictcontrolofthe

curriculum.Anamendmentofthislaw,promulgatedin1805duringtheNapoleonicWars,

tightenedgovernmentcontrolovertheschoolingsystemand,inconsequenceoftheHabsburgs’

contemptfortheideasoftheFrenchRevolution,reinforceditsconservativethrust.Thesystem

alsobetrayedapreferencefor(thoughnotinsistenceon)instructioninGerman.6Caseswhere

“RomanianchildrenweretaughtinPolishtoreadfromaGermantextbook”(Prausek,1868:6)

openedthesystemtoaccusationsofGermanization.Therevolutionsof1848producedafew

changesinlegislation,mostnotablyanexplicitstatementinfavorofinstructioninone’smother

tongue,freedomofteachingmethods,anexpansionofprimaryschoolsfromtwogradestothree

gradesandanextensionofteachingcollegesfromoneyeartotwo.Butotherattemptsatliberal

educationweresoonquashedthroughtheConcordatof1855,whichputtheChurchyetagain

firmlyinchargeoftheschoolsupervisionandteacherappointments.Eventhelanguage

provisionswerelessthanperfectlyenforced,asweshallsee,andthefreedomofteaching

methodfellflat.7

Untilthesecularizationreformsof1868‐69,thecurriculumwassaturatedwithreligious

instruction.Pacher(2008)quotesa“recommended”schooltimetablewherecatechismand

biblicalhistorytookupsixoutofeighteenweeklylessonsforthe9‐12year‐oldsandfouroutof

6Thelocalprimaryschools,eventhosewithaSlaviclanguageofinstruction,werecalled“Germanschools”.7The1805lawrecommendedthatteacherscommittheteachermanualtomemorysoastominimizedeviationsfromitintheclassroom.Itexplicitlystatedthat“theBell‐Lancastermethod”ofpeerlearning,thenpopularinEngland,“wasbanishedfromourclass‐rooms.”Post‐1848,teacherswerenolongerboundbytheseprovisionsbut,forvariousreasons,onlyfewteacherstookuptheopportunitytoupdatetheirmethods(Ficker,1873:40).

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nineweeklylessonsamongthe6‐8yearolds.Thelawstipulatedthataschooldayshould

preferablybeginandendwithalessonofreligion(Helfert,1860:286).Writing,readingand

countingwerenextinimportance,apportionedequallyacrosstheremainingweeklylessons,

withafewlessonssparedforsinging.

[Figure2]

Figure2offersarudimentarymeasureoftheeffectivenessoftheseschools.Itplotsthe

averageenrollmentrecordedforthegenerationborninthe1830sagainsttheliteracyratesof

thatsamecohortinthe1890census.Atfirstglance,theschoolsseemtohavebeenadequately

successfulinteachingliteracy:thescatterplotbyandlargeliesalongthe45°lineandsimple

correlationbetweenthetwovariablesis0.98formenand0.99forwomen.Buttherearealso

someworryingsigns.ConsiderthecaseofCarinthianwomen(denotedKT).While47.4%ofthem

enrolledinschoolduringtheirschool‐ageyears,only30%reportedthemselvescapableof

readingandwritinginthe1890census.Ofcourse,historicalliteracyratesaresusceptibleto

biasessuchaseducationcreep,selectivemortalityandselectivemigration.Thefirsttwoofthese,

however,biasliteracyupwards(asilliteratesdieoutfasterthanliteratesandsurvivingilliterates

reportthemselvesmoreeducatedthantheyreallyare),sointheCarinthiancase,onewouldhave

topositanenormousselectiveemigrationofliteratewomen(butnotliteratemenwhoaremuch

closertothe45°line)togeneratethemorethan17‐pointshortfallinliteracyrelativeto

enrollment.Clearly,themoreplausibleexplanationisthattheenrolledgirlsdidnotattendvery

diligently,oriftheydidattend,theydidnotlearnmuch,oreveniftheydidlearn,theylaterlost

theirliteracyskillsforlackofuse.Noneofthesehypothesesbodeswellfortheeffectivenessof

theeducationalsystem.

Schoolingwascompulsoryforchildrenaged6to12.Figure3suggeststhatatleastinsome

provincestheenrollmentwassuccessfullyenforced.Butitalsoshowsatellingcontrastwith

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enrollmentratesreportedduringthesametimeperiodinthoseUSstateswhereschool

attendancewasnotyetcompulsory.8ThegradualarcoftheAmericanage‐enrollmentprofile

capturesvoluntarydecisions,basedpresumablyonone’sweighingtheprosandconsofeach

extrayearofeducation.Ontheotherhand,thesharpincreaseinenrollmentat6andthesharp

declineat12insomeHabsburgprovincessuggestsenrollmentconformingnotsomuchtothe

schoolingpreferencesofchildrenortheirparentsbutrathertothelaw’sdemands.Together

withtheCarinthianexampleofashortfallinliteracy,discussedearlier,thisconstitutesa

particularlydamningindictment:aschoolingsystemthatunderperformsintermsofeducation,

yetforcesthepopulationtodevotetimetoitoverandbeyonditsusefulmargin.

[Figure3here]

Apartfromcompellingpupilstoattend,thelawalsorequiredlocalcommunitiestosupplythe

resourcesforschoolprovision.Thisconsistedofconstructionandmaintenanceoftheschool

building,payingteachersalaryandprovidingteacheraccommodation.Inprinciple,wherever

100school‐agechildrenlivedwithinhalf‐hourofwalkingdistance,aschoolwastobebuiltwith

ideally80butcertainlynomorethan100pupilsperclassroom.Table1,column(ii)showsthat,

with12.04classroomsper1000school‐agechildrenonaverage,thisregulationwasupheldin

manydistrictsbutthehighstandarddeviationaroundthisaveragerevealsthatthelegal

benchmarkwasfarfromuniversal.

Whenaschoolwasbuilt,theareaaroundit,usuallycorrespondingtotheparish,was

considered“covered”(eingeschult)andtheschool‐agechildrenlivingtherewereobligedbylaw

toenrollandattendtheparticularlocalschool.9Allcoreprovincesweremorethan80%covered,

althoughthereweredistrictsintheAustrianLittoralwherecoveragesankbelow30%.Lessthan8ThedataforUSstateswerekindlysharedbyKarenClayandherco‐authorsinClayetal.(2012).9Whenavillageoranareawasnotcovered,thelocalpriestnonethelesshadtoreporttohissuperiorsonthenumberofchildreninschoolage,whichishowwecametoknowtheirnumbers.

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fullcoverageindicatesthatsomecommunitiesdidnotmeetthestipulationsofthelaw.Ifatown

oraparishfailedtoprovideschooling,thedistrictauthoritieshadattheirdisposalsomecarrots

intheformofsubsidiesandsomesticksintheformofpowertosequesteraportionofthelocal

budgetandassignittoschooling.Theupperechelonofbothpublicandchurchadministration

expressed,however,astrongpreferenceforusingcarrotsandavoidingunnecessaryconflict

betweendistrictsupervisorsandindividualcommunities(Helfert,1860:19).Communitieswere

expectedtoenforceattendance.Withoverallenrollmentreachingonly70.2%(Table1),itis

clearthatinsomeschooldistricts–especiallyinthe“new”provinces–schoolingwas

compulsoryinnameonly.10

Asregardstheethnic/languagequestion,post‐1848officialpolicynolongerendorsed

educationinGermanexplicitlybutissuesoflanguageofinstructionandofpublicsupportfor

non‐Germanschoolsremainedasorespotpracticallytotheendofthemonarchy.Non‐German

nationalitiescontinuouslycomplainedabouttheresidualGermanizingtendenciesofthe

educationalsystem,whichwas,afterall,runbyanoverwhelminglyGermancivilandchurch

administrationsanddesignedbyGermanpolicymakers.Our1865datasetincludes22school

districtswithzeroGermanstudentswhichnonethelesshadatleastoneGermanorbilingual

school.ThebroadoutlinesofthesituationaresummarizedinTable2,whichalsoreportssimple

t‐testsformeandifferences.TheGerman‐majoritydistrictsdidhavealmosteverythingbetter

andbyasignificantmargin:moreclassroomsandteachersper1000school‐agechildren,more

publicspendingperchildandbettercoveragebyschoolinfrastructure.Onlythecurriculum

extent,measuredbytheaveragenumberofgradesperschool,wascomparablebetweenGerman

andnon‐Germandistricts.TheGermandistrictsfellbehind,however,inprovisionofeducationin10Austrianstatisticsmakenoconceptualdistinctionbetweenenrollmentandattendance.ThefiguresreportedinTable1comefromstatisticslabeled“Schulbesuch”(schoolattendance)intheoriginaldocument.Butfromthecontextoftheoperationoftheschools,itisclearthattheywereenrollmentnumbers.

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minoritylanguages,i.e.inbuildingschoolsforthelocalSlavminorities,whileGermanminorities

innon‐Germandistrictshadalmostcertainaccesstoinstructionintheirmothertongue.11The

betterschoolprovisioninGermandistrictscouldbearesultoftheirhigherlevelofeconomic

developmentbuttheeconomicvariablesatthebottomofTable2castsomedoubtonthat:some

arebetterinGermandistricts,someinnon‐Germanones,someshownosignificantdifference.

[Table2here]

TheGermanelementundoubtedlyhadthestrongestpoliticalvoiceamongallthe

nationalities,althoughintheHabsburgcontextitwouldbecounterproductivetotrytomeasure

itusingelectoralstatistics.12Table2suggeststhattheGermanpoliticalvoice,howeverinformal

andunobservabledirectly,mayhavehadmeasureableimpactonthedisbursementofpublic

fundsinmattersofschoolingandespeciallyminorityGermanschooling.Recallthatthedistrict

authorities–thepoliticalelitesinourcase–werenotinastrongpositiontopreventaschool

frombeingbuiltbyadeterminedcommunity,buttheycouldmakeitsignificantlyeasierand

cheaperbyprovidingasubsidytoawithin‐districtminoritywhomaynothavebeenbigenough

tosupportaschoolonitsown.

Animportantpartofourempiricalanalysisistoseewhethertheseplaindifferencesinmean

alongethniclinessurvivewhenwecontrolforotherlocalfactors.Themainlessonfromourbrief

outlineoftheAustrianeducationalsystemisthat–unlikeintheEasterlin‐Lindertstory,where

politicalvoiceisanallyofeconomicdevelopment–inourcasethetwoforcesare,ifnotset

againsteachother,thencertainlynotpushinginthesamedirection.Ifthepro‐German

advantagesdonotsurvivecontrollingforeconomicvariables,thenapparentlypoliticalvoice11Notethattheseparticularmeasuresarecalculatedfromasubsampleofdistrictswithmorethan100minoritystudents,i.e.thosewhereaminorityschoolmaybereasonablyjustified.12Asof1865,theEmpirehadhadexperiencewithmeretwonation‐wideelections(1848and1861),thesuffragewashighlyconstrainedandtoocomplicatedtointerpreteasily,fallingintofourdifferentelectoralcollegesofunequalimportance;andinanycase,itencompassedonlyatinyfractionofthepublic.

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matteredlessthandevelopment.If,ontheotherhand,economicvariablesturnoutnottomatter

inthepresenceoftheethnicvariables,thenitsuggeststhattheschoolwasnotsomuchan

engineofgrowthasaculturalbattlefield.

4. Estimation

Weseparateourempiricalanalysisintothreeparts.First,ontheindividuallevel,economic

developmentmaypotentiallyaffectone’sdemandindependentlyoftheprovisionofschooling.

Thatis,whetherparentschoosetoenrolltheirchildinaschool,givensomeexistingsupply,

dependsontheexpectedreturnstoeducation.Second,onthedistrictlevel,theprovisionof

schoolingmayrespondtoeconomicdevelopmentthroughtwochannels:byincreasingthetax

basewhichwillmakepublicfinancingoflocalschoolseasierandpresumablythroughgreater

demandforsuchprovision.Finally,toassesstheimportanceofpoliticalvoicerelativetothe

economy,welookfordifferencesinthetreatmentofGermanminoritiesinnon‐Germandistricts

andnon‐GermanminoritiesinGermandistrictsalongtheethnicboundarieswithintheEmpire.

4.1. Individualdemandforeducation

Weinvestigatehowenrollmentinadistrictrespondedtoeconomicchanges,conditionalon

theexistingsupplyofschools.Ideally,onewouldliketoknowtheexpectedreturnstoprimary

educationforindividualchildrenandseehowthesevariedwithdevelopment.Wedonothave

suchdetailedinformationandsoweexploitthedifferenceinpost‐primaryschoolcareersopen

toboysandtogirls.Foreachdistrict,weconstructadependentvariablethatmeasures

enrollmentofboysandgirlsseparately.Sincethisvariationtookplacewithindistricts,weare

abletoincludedistrict‐levelfixedeffectsthatwillcapturedistrict‐specificlevelsoflaw

enforcement,supervisionandothercharacteristicsoftheschoolsupply.Sinceboysandgirlsface

thesameschoolsupplyandprimaryschoolingwasoverwhelminglycoeducationalintermsof

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extentandcontent,anydifferencesbetweenboys’andgirls’enrollmentwillbeduetodifferences

intheirexpectedreturnstoeducation:thepost‐primary‐schoolprospects.13

Girlsdidnotcontinuewiththeireducationbeyondprimaryschool;secondaryschoolswere

forboysonly.Weusethesumofallsecondaryschools’enteringclassslotswithin50kmofa

districttomeasuretheprospectsofsecondaryeducationforboys;forgirls,thisvalueissetto

zero.Girlsandboysalsobenefiteddifferentiallyfromeconomicmodernizationintheir

employmentprospectsaftergraduation.Whileindustrializationgeneratednewemployment

opportunitiesformenandwomenalike,somesectorsweremorefeminizedthanothers.We

measuretheimpactofeconomicdevelopmentonprivatedemandforeducationbyconstructing

whatwecallliteracycontentoflocallabormarket:fromthe1869populationcensus,wetake

sectoralsharesofemploymentwithin50kmofeachschooldistrict,estimateproportionsof

womenineachsectorandevaluateeachoccupationintermsofitsliteracyusage,usingMitch’s

(1992:213‐4)classificationformid‐19thcenturyjobs.14Theresultisanindexbetween0and1

where1meansthatalllocaljobsrequiredliteracyand0meansthatliteracywasnotinanyway

usefulinthelocallabormarket.Figure4displaysthevaluesformenandwomenineachdistrict.

[Figure4here]

Schoolattendancewascompulsorybylawandeventhoughitsenforcementwasfarfrom

perfect,theactualobservedenrollmentswerepresumablyatleastpartiallyaffectedbythe

existingthreatsoffinesandotherpenalties.However,inallthedistrictsinourdataset,actual

enrollmentsincludedchildrenwhowerenotunderlegalcompulsion.First,therewerechildren

wholivedinvillagescurrentlynotcoveredbyschoolprovision(nichteingeschulteOrtschaften)

anditisclearfromthedatathatinmanyplacesthesedidactuallyenrollinwhicheverschoolwas

13Wealsoincludeaboysfixedeffecttocapturepotentialother,non‐economic,genderbiases.14SeeAppendix1formoredetailontheconstructionofthisvariable.

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closest.15Second,whilecompulsoryeducationextendedtoage12,allbutthreedistrictsreport

positiveenrollmentamongchildrenover12.Forthesetwogroups,theenrollmentwas

voluntary,soastoavoidtheproblemofacensoreddependentvariable.Wethereforeuse,asour

dependentvariableYis,enrollmentpercoveredschool‐agechild.Thepresenceofthetwogroups

ofvoluntaryenrolleesexplainswhyinmanydistrictsthismeasurewouldexceed1.

Ourspecificationis:

Eq.(1) Yis 1 2ECis 3LCis 41(Boys)is iDi i

whereECisstandsforsecondaryschoolenteringclasseswithin50kmoftheschooldistrict,LCisis

theliteracycontentoflocallabormarket,1(Boys)isisagenderfixedeffectandDiisavectorof

schooldistrictfixedeffects.Subscriptiindexesschooldistricts,subscriptsgenders.

[Table3here]

Table3presentstheresultsoftheleast‐squaresestimation.Forcomparison,wealsopresent

amodelwithnofixedeffectsincolumn(i)andwithdiocese(butnotdistrict)fixedeffectsin

column(ii).Ourbaselinespecificationisincolumn(iii).Overall,thecoefficientsonliteracy

contentdonotindicateaverylargeimpactonenrollment.Usingthestandarddeviationfrom

Table1,increasingliteracycontentby0.04willincreaseenrollmentby2.5percentagepoint.

Eventhesecondaryschoolprospectshaveaweakimpact.16Toseehowrobusttheseresultsare,

were‐estimatedthesamespecificationonvarioussubsamples,aspresentedincolumns(iv)–

(vii).Perhapsthebiggestworry,givenourdefinitionofthedependentvariable,wouldbethat15Coverage(Einschulung)meantthateachchildwasassignedtoaparticularschool.Teacherswererequiredtoturnawaypupilswhowereassignedtoadifferentschoolbutthelawwassilentonchildrenwhowerenotassignedtoanyschool.16Interestingly,giventhattheschoolinglawwasambiguousenoughtoallowforacertainageoverlapbetweenprimaryandsecondaryschools,thenegativesignofthiscoefficientsuggeststhatanincreaseinavailablesecondaryschoolslotsproducednomorethanarelocationofsomepupilsfromprimaryschoolstoasecondaryschool.Thiscorrespondsalsowiththesizeofthecoefficient–onestandarddeviationincreaseinsecondaryschoolspotsdecreasesenrollmentratebyabout1percentagepoint–i.e.verylittle;andsecondaryschoolenrollmentusuallyhoveredaround1‐2percentofanagecohort(seeFigure3).

16

districtswithalreadyfullcoveragewouldinevitablyshowconsiderablylessvariationin

enrollmentbecausevoluntaryenrollmentcanonlyhappentherealongtheagemargin,butnot

thecoveragemargin.ThelasttwocolumnsofTable3givesomecredencetothis.Thedifference

intheliteracycontentcoefficientsisafactorofthreeandahalf.Still,eventhelargecoefficientin

column(vii)wouldimplyanincreaseinenrollmentof4.2percentagepointsasaresultofextra

0.04increaseinliteracycontentinthelocallabormarket.Inshort,theeffectsinanyofthe

subsamplesareeffectivelyzero,andafairlypreciselyestimatedzeroatthat.Ifonaverage95.2

outofevery100coveredschoolagechildrenwenttoschool,itwasnotthelureoflabormarket

payofftoliteracythatwasdoingtheheavylifting.

4.2. Determinantsofschoolsupply

Theindividualdemandforeducationthereforedoesnotseemtohaverespondedvery

stronglytoeconomicdevelopment.Eithertheeducationofferedinschoolwasnotastrong

complementtomodernindustry,orschools–andtheenforcementthatwentwiththem–were

built“aheadofdemand”,therebyplacingamoreorlessbindingconstraintonwhoenrolled.

Sincewedonothaveanydirectmeasureofthestrengthofenforcement,whichwouldbe

capturedbythedistrictfixedeffectsanyway,andweknowthatanestablishedteacherina

schoolwasthe“firstinstance”ofenforcementofcompulsoryattendance,thisquestionultimately

speakstothedeterminantsofthesupplyofschools:werethedevelopedcommunitiesbuilding

moreschoolsbecausetheyprovedusefultoeconomicdevelopmentinawaynotcapturedby

Table3?Orwastheindustrializationmerelymakingcompliancewiththeschoolinglaweasier?

Wechoosethreeschoolcharacteristicstocapturetheextentandqualityofschoolprovision.

Thesearealldefinedonthelevelofaschooldistrict.Ourmainmeasureofcurriculumqualityis

17

theaveragenumberofgradesperschool.17Theextentanddensityofschoolinfrastructureis

measuredbythenumberof(non‐priest)teachersper1000school‐agechildren.18Wealso

includeannualexpenditureonteachingstaffperschool‐agechildinadistrict,measuredin

guldenofAustriancurrency.19

Toanalyzetheintersectionbetweeneconomyandpolitics,weestimate,inTable4,asystem

ofsimultaneousequationswhereweallowthelocalindustrialemploymentsharetodependon

localstockofhumancapital,proxiedbythesupplyofteachersandqualityofprimaryschools.

Thesystemisspecifiedasfollows:

Eq.(2a) Ti= α1+β1INDi +θ11i(G)+λ1Xi+DFE+εi1

Eq.(2b) GRi=α2+β2INDi +θ21i(G)+λ2Xi+DFE+εi2

Eq.(2c) Pi= α3+β3INDi +θ31i(G)+λ3Xi+DFE+εi3

Eq.(2d) INDi=α4 +γ4Ti+δ4GRi+ζ4Pi+θ41i(G)+λ4Xi+DFE+εi4

whereTiisthenumberofteachersper1000school‐agechildren,GRiistheaveragegrades

perschool,Piisthespendingonteachingstaffperschool‐agechild,INDiistheshareof

employmentinindustry,1i(G)isanindicatorforadistrictwithaGermanmajorityandXiisa

17Two‐gradeschoolsfollowedthecurriculumfollowedinSection3.Communitiescould,inagreementwithchurchandcivilauthorities,extenditbyintroducingthirdandfourthgradeswheresubjectslikeGeography,NatureandDrawingwerealsoincluded.Passingfourthgradewasaprerequisiteforfurthersecondaryeducation.18Wecouldalsoincludeclassroomsper1000school‐agechildrenamongtheendogenousvariablesinthissystemofequationsbutitishighlycorrelatedwiththeteachermeasure.19Ourmeasureofexpenditureisequaltothetotalincomereceivedbytheteacher.Incasethepayfrompublicbudgetwasinsufficient,thecommunityandtheteachercouldagreethattheteacherlevyanadditionalfeefromattendingpupils,calledSchulgeld.Wedonothaveinformationonspendingonmaintenanceofinfrastructure,butteachersalariesmakeupthebulkofpublicspendingoneducation(Go&Lindert,2010).

18

vectorofexogenousvariableswhichensurethattheorderconditionsofidentificationbe

satisfied.20DFEstandfordiocesefixedeffects.

TheresultsarepresentedinTable4andtheysuggestalinkfromindustrialdevelopmentto

schoolsupplybutnotnecessarilytheotherwayround.Shareofindustrialemployment

positivelyimpactswithallthreemeasuresofschoolprovision;inequations2band2c,the

impactissizeable.Onestandard‐deviationincreaseinindustrialshare(13.9percentagepoints–

or0.139)wouldadd0.4grades21ineachschoolinthedistrictandincreasethespendingon

teachingstaffby0.68guldenperschool‐agechild.Ontheotherhand,thecoefficientsonthe

schoolvariablesincolumn2dareallimpreciselyestimatedanddonotevenoperateinthesame

direction.Thepositiveeffectsofgradesperschoolandspendingonteachersareinfactmore

thanoutweighedbythenegativeimpactofteachersupply,whenallthreemeasuresare

increasedbyonestandarddeviation.Theseconclusionsarereinforced,when,inPanelB,were‐

estimatethesystemwithoutVienna,aclearoutlieralongmostdimensions(seeTable1,column

(iv)).

[Table4here]

ThecoefficientsontheGermandummyvariablesuggestthateconomicfactorsareunableto

accountfullyfordifferencesinschoolprovisionbetweennationalitiesbuttheresultsare

somewhatambiguous.Germandistrictsseemtoenjoysignificantlyhigherteachersupplyper

20ThevectorXimustincludeenoughexogenousshiftersforthesystemtobeidentified.Theseare:ameasureofpopulationdispersioninEq.(2a),numberofspotsinlocalsecondaryschoolsinEq.(2b),distancetoprovincialcapitalinEq.(2c)andtotalpopulationlivinginurbancenterswithmorethan5000inhabitantsinEq.(2d).Thesearedeterminedexogenously(outsidethemodel)buthaveadirectbearingonthedependentvariables.Forexample,populationdispersionwillincreasethedemandforteachersbecausedistrictswithmanysmallvillageswillhavetobuildmoresmallerschoolscomparedtoamoreconcentrateddistrict,eveniftheybothhavecomparablepopulationsofschool‐agechildren.21Giventhatgradesareindivisible,perhapsabetterwayofexpressingtheresultisthatallschoolsinadistrictwouldberaisedfromtwo‐gradeschoolstothree‐gradeschools–abigchange–,ifindustrialshareincreasedby35percentagepoints.

19

childthannon‐Germandistrictbuttheyalsoseemtohaveaslightlylowerqualityofschools

(coefficientincolumn2dis‐0.22,statisticallysignificantbutsmall),withnodifferencein

spendingonteachers(column2c).ButGermandistrictshappentobemoreindustrial(after

controllingforotherfactors),soonthebasisofTable4aloneonecouldarguethatthe

advantagesofGermandistricts,reportedinTable2asunconditionalmeans,werereallyaresult

ofdifferenteconomicconditions,whichcorrelatewithGermanpopulation.

Overall,theevidenceinTable4indicatesastronginteractionbetweenthelocaleconomyand

thelocalschoolsupply.Theextentofindustrialdevelopmentispositivelyandnon‐trivially

correlatedwithinvestmentinschoolqualityaswellasschoolquantity.Thedifferencesbetween

schoolsinGermanandnon‐Germandistrictsdonotquitegoawayaftercontrollingforthe

economicenvironment,althoughtheyarediminishedalongsomedimensions.

4.3. Treatmentofethnicminorities:aspatialdiscontinuityregression

Toisolatetheimpactof(thepro‐German)politicalvoiceoftheelitesvsthatofthelocal

massesascleanlyaspossible,wegobelowthelevelofschooldistrictsandcomparethe

treatmentofGermanminoritiesinnon‐Germandistrictsagainstthetreatmentofnon‐German

minoritiesinGermandistricts.Asmentionedbefore,districtorhigherauthoritieshadscarcely

anyofficialmeanstopreventaschoolfrombeingestablished;infact,theywereexpectedto

enforcealaw,whichrequiredfullschoolcoverageandfullattendance.Theycould,however,be

moreorlesscooperativeinprovidingasubsidytosmallcommunitieswhoexpressedadesireto

buildaschoolbutclaimedtolacksufficientmeanstosustainit.Suchcouldreasonablybethe

caseoflocalethnicminorities.Ifpoliticalvoicematteredinthisway,thenwewouldexpect–

20

sincepublicadministrationwasoverwhelminglyGerman22–thatGermanminoritieswouldbe

moresuccessfulinsecuringsuchaidthannon‐Germanones.

Toexplorethisidea,weexploitthefactthatthe1865schoolcensusreportedthelanguageof

instructionforeachschoolineachdistrict,togetherwiththenumberofstudentsofeachmother

tongue.Evenwhensomeminoritiesweretoosmalltohavetheirownschools,therecordnotedif

alocalschoolwasbilingual,providingatleastaparallelclassintheminoritylanguage.To

controlforasmuchvariationinothercharacteristicsofthesedistricts,welookforGermanand

non‐Germandistrictsstraddlinglong‐standingethnicboundarieswithintheEmpire.Weare

confidentthattheseareexogenoustoschoolingprovision,astheywerearesultofmediaeval

settlementpatterns,andintheopinionof19thcenturydemographerstheyscarcelymoved

(Rauchberg,1905;Ficker,1864;Czoernig,1855).Theboundarieswerealsoquitesharp,somuch

sothattherewerepairsofdistricts,nomorethan15milesapart,oneithersideofanethnic

boundarythatreportednominoritystudentsatall.However,wewereabletolocate34pairsof

Germanandnon‐Germandistrictssuchthattheybothcontainedalinguisticminoritythateither

hadaschooloperatinginitsownlanguageorwasbigenoughthatitshouldhavehadone(i.e.it

numberedover100studentsofagivenmothertongue).Ofthese34matches,27areGerman‐

CzechinBohemia,MoraviaandSilesia,5areGerman‐SloveneinStyria,CarinthiaandCarniola

and2areGerman‐ItalianinSouthTyrol.

The34matchesconsistof68districts,eachappearinginexactlyonematch,andeachdistrict

contributestwoobservations:oneforthelocalmajorityschoolsandoneforlocalminority

schools.23

22Until1880,GermanwasthesolelanguageofadministrationbothinternallyandexternallyandclerksofGermanmothertonguedisproportionatelyoutnumberedothernationalities(Jaszi,1929:273‐279)23Schoolsthatofferedbothlocallanguagesofinstructionarecountedasminorityschools.

21

Eq.(4) Yi 11i(G) 21i(Min) 31i(GMin) 4INDi 51i(U) jDji ij

OurregressionspecificationincludesdummyvariablesforaGermanmajoritydistrict,1i(G),for

minoritystatus,1i(Min),foraGermanminorityschool,1i(GMin),aswellas34matchfixedeffects,

Dj.Thevariable1i(U)isadummyforurbanschooldistricts.Sincethedistrictsareimmediate

neighbors(averagedistancebetweentheiradministrativecentersbeing11miles),anylocal

specificsarelikelytooperateinbothmatcheddistrictsandwillbecapturedbythematchfixed

effect.Wealsoincludethelocalshareofindustrialemployment,INDi,tocontrolforwithin‐match

variationineconomicdevelopment.Giventhisset‐upthereareseveralwaysinwhichthe

importanceofpoliticalvoicecanplayout:(i)ifβ2=β3=0,thenwefindnoconclusiveevidenceof

minoritiesofeitherkindreceivinganysystematicallydifferenttreatment,soitwillbedifficultto

arguethatdistrictauthoritieswereplayingfavorites;(ii)ifβ2≠β3=0,thenminoritiesofany

kindaretreateddifferentlyandtheadvantageofpoliticalvoicerestswithdistrictmajorities

ratherthanwithGermans;(iii)ifβ3≠0,thentheGermanminorityisclearlygettingadifferent

treatment(forbetterorworse)andsopoliticalvoicematters.

Thesimultaneousequationsframeworkemployedinprevioussectionrestedontheunstated

assumptionthateconomicdevelopment,measuredbyINDi,couldbeendogenoustotheschool

supply.Thestockofschoolinginfrastructure,availablein1865,islikelyhighlycorrelatedwith

paststockofschoolinginfrastructure(sinceschoolbuildings,teachingstaffandevenpublic

budgetitemshavecertaininertia),whichinturnaffectslocalliteracylevelsand,byextension,

economicdevelopment.Consistencyalonerequiresthatthepotentialendogeneityweassumed

inEqs.2a‐2dbeaccountedforinthespatialdiscontinuityregressionalso,whichiswhywe

instrumentforINDi.Relyingonanoldempiricalregularity,observedalreadybyAustrian

contemporaries,thateconomicdevelopmentfollowsaWest‐Eastgradient,weinstrumentINDi

withlongitude(Good,1984:11).

22

TheresultsarepresentedinTable5.Theinstrument,thoughnotperfect,seemstoperform

reasonablywell:thefirst‐stageF‐statisticisequalto13.4.With34fixedeffectsand8other

variablesinaregressioncounting136observations,statisticalsignificanceisinevitablygoingto

suffer.Yetinspiteofthat,someclearpatternsemerge.Acrossthedifferentspecifications,wesee

β1eitherpositiveorastatisticalzero,indicatingthatGerman‐majoritydistrictshadatleastsome

advantage,alreadyseeninTables2and4.Butitwentdeeperthanthat:β2<0andisstatistically

significantinallfourregressions,whileβ3>0inallandsignificantinthreeofthem.Thebottom

ofTable5showsaseriesoft‐testsforβ2+β3=0,toseewhethertheGermanminoritieshad

enoughclouttooutweightheotherwisenegativeeffectofminoritystatus.Asitturnedout,β2+

β3>0unambiguouslyinthreespecifications,i.e.theGermanminoritieswereactuallydoing

betterintermsofthesupplyofteachers,classroomsandpublicfundsperschool‐agechildthan

thelocalmajorities(insomeaspects,theywereevenslightlybetteroffthanGermanschoolsin

Germandistricts,β2+β3>β1).Overall,theseresultsadduptoafairlyconsistentevidenceof

significantadvantagefortheGermans–itmeansthatwhenitcametoastand‐offbetweenthe

GermanelitesandlocalSlavmajorities,theeliteswereabletoimpresstheirpreferencesonthe

ethnicmixoflocalschooling.

[Table5here]

Withinthenarrowconfinesofmatcheddistrictpairs,theimpactofeconomicdevelopmentis

onlyimpreciselyestimatedbecausethereisusuallyrelativelylittlevariationinindustrial

employment(incontrasttothesharpethnicboundarywhichdistrictpairsstraddle).The

coefficientsaremostlypositive(withtheexceptionofcolumn(iv))butnotpractically

meaningful.Perhapsonlyforgradesperschool(column(i))andspendingperschool‐agechild

(column(ii))canitbesaidtohaveanoteworthyimpact:anincreaseinINDibythestandard

23

deviationof0.143inthesubsamplewouldadd0.21florinstoper‐childspendingandadd0.25

gradestoeveryschoolinadistrict.

5. Conclusions

TheevidencerevealstwoimportantfeaturesoftheHabsburgeducationalsystem.First,we

findstrongersupportfortheclaimthateconomicdevelopmentenabledamoreextensivesupply

ofeducationalfacilities,perhapsthroughbroadeningofthetaxbase,thanforthenotionthat

economicdevelopmentgeneratedastrongindividualdemandforpubliceducation,suchas

throughraisingreturnstoprimaryeducation.NotthattheHabsburgschoolsfailedinimparting

literacyacrosstheboard–thecorrelationsinFigure2aretoostrongforsuchaclaim.Butthe

curriculumalsoincludedalotofextramaterialthatdidnotgenerateusefulhumancapital.

Apparently,theViennesegovernmentdesignedaflawedproduct,decreedthatitbeoversupplied

andburdenedlocalcommunitieswithpayingforit.Wehavenoestimateofhowmuch

deadweightlossthispolicygeneratedbutwecannotfindanypositiveeffectofthispolicyon

economicdevelopment.

Second–andcloselyrelated,thereasonwhyeconomicconsiderationsweresidelinedistobe

foundinthepoliticsofschooling.Politicalvoiceseemstohaveplayedarole.Accountsof

Austrianpoliticalhistoryshowunequivocallythateducation,itsextent,availabilityandlanguage

ofinstructionwerehighlypoliticizedmatters.Wefindevidencethatthisnationalistpolitics

impactededucationalchoicesmadeontheground,evenatthelocallevel.

Overall,thisaddsuptoadifferentpicturetothatpaintedregardingthemodernriseofpublic

education.Whilealltheelementsoftheusualstory–theindustrialization,thepublicprovisionof

schools,thepoliticalvoiceofimportantpressuregroups–arepresentintheAustriancase,they

combineinawayverydifferentfromhow,forexample,GoandLindert(2007,2010)have

describedtheriseofAmericanpublicschooling.Ratherthaneducationandhumancapital

24

accumulationbeingamongthedriversofeconomicgrowth,weseehoweconomicdevelopment

providestheresourcesfortheHabsburgEmpire’sownversionof“culturewars”wherebythe

schooldistrictelites–farfromwithholdingpublicresourcesfromeducation–activelysubsidize

thatkindofschoolingwhichcorrespondstotheirethnicpreferences.Forthosewholacked

politicalvoice–inourcase,thenon‐Germannationalities–theroadaheaddidnotpassfirst

throughenfranchisementtopubliceducationandeventuallytoeconomicdevelopmentbut

exactlytheotherway:economicgrowthallowedthemtocatchup(atleastinsomerespects)in

matterseducationalwhich–agenerationlater(andoutsidethescopeofourpaper)–ledtotheir

politicalself‐assertion.Andwhilethisorderofcausationdoesnotinanywayrefutethemore

traditionalaccount,atleastasitappliestotheUnitedStates,forexample,ithighlightsthatthe

interplayofeducation,politicsanddevelopmentcanbemuchmorevaried.

25

Appendix1–Measuringliteracycontentoflocallabormarket

Thevariable“Literacycontentoflocallabormarket”,usedinTable3,isacombinationof

threepiecesofinformation.Thefirstpieceisthestructureofemploymentoflocallabormarket.

Wedrawonthedatapublishedinthe1869Cisleithaniancensus(K.k.StatistischeZentral‐

Commission,1871).Itcontainsemploymenttotalsforeachof813Gerichts‐bezirks,thesmallest

administrativeunitstheninexistence,splitinto50occupations(seeTableA1belowfordetail).

Separatecategoriesformenwithoutanoccupation,womenwithoutanoccupationandchildren

undertheageof14werealsoincludedsoastofullyaccountforthewholepopulationineach

Gerichts‐bezirk.

Unfortunately,theoccupationsinthe1869censuswerenotdisaggregatedbygender.

Therefore,thesecondpieceofinformationcomesfromthe1880census,whichprovidedgender‐

specificemploymentfiguresforbroadlysimilaroccupationalcategories.24Thesewereavailable

foreachprovinceandtheyvariedfromzeroshareofwomen(amongarmyofficers)tozeroshare

ofmen(amongnunsandmidwives).

ThethirdandfinalpieceofinformationcamefromMitch(1992:213‐214).Itisa

classificationofoccupationsbyuseofliteracyformid‐19thcenturyEngland.Wemakethe

assumptionthattheclassificationisapplicabletotheHabsburgEmpirewithoutmajorchanges,

especiallysincemostoftheassignmentsareprobablyquiteuncontroversial.Onepotentially

significantdeviationfromMitch(1992)consistsinreassigningfarmersfromthelikelycategory

totheambiguouscategorybutitisachangethatdoesnotaffecttheresultsinTable3andonly

leadstoanincreaseintheliteracycontentmeasureacrosstheboard.

24Severalgendercompositionsforsomeindustrialsectorshadtobesuppliedfromthe1890census.

26

Thesethreefactorsarecombinedtoproducetheliteracycontentvariable.Foreach

schooldistrict,wetaketheemploymentdatainGerichts‐bezirksthatarewithin50kmofthe

schooldistrict,calculatethesharesofemploymentseparatelyformenandwomenandweigh

thembytheassignedliteracyweightL(notedinTableA1).

TableA1–AssignmentofoccupationstovariousliteracycategoriesLiteracyrequired(L=1)Priestsandnuns,publicsectorclerks,armyofficers,teachers,students,writers,artists,lawyers,doctors,surgeons,midwives,pharmacists,sanitationworkers,clerksintheprivatesector*,entrepreneursandbusinessowners*,employeesinfinanceLiteracylikelytobeuseful(L=0.7)Employeesinthetradingsector,rentiersandrentersofrealpropertyOccupationswithpossible(orambiguous)useofliteracy(L=0.3)Farmers,sharecroppers,laborers*,domesticserviceOccupationsunlikelytouseliteracy(L=0)Agriculturallaborersandfarmservants,fishermen,industriallaborers*,thosewithoutoccupationNote:TheassignmentsarebasedonMitch(1992:213‐214).The*denotesthoseoccupationswhichintheoriginaldocumentarefurtherdisaggregatedintovarioussectors(e.g.8separateindustrialsectors).

27

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30

Table 1 - Descriptive statistics (i) (ii) (iii) (iv)

All

provinces Core

provinces New

provinces Vienna

Number of school districts 730 546 184 1

Number of school-age children 3036 2882 3491 37958 [2514] [2394] [2797]

Average number of grades 2.17 3.91 [0.48]

Non-priest teachers per 1000 school-age children

11.62 12.71 8.37 15.39 [7.82] [6.73] [9.72]

Classrooms per 1000 school-age children

12.04 12.17 [6.2]

Teaching staff expenditure per school-age child

2.16 5.22 [0.9]

Percent school-age children covered by school provision (school coverage)

95.7 100.0 [9.69]

Percent school-age children enrolled 70.2 84.1 29.1 86.1 [29.53] [17.31] [17.49]

Enrollment per 100 covered school-age children

95.2 96.0 [16.92]

# steam engines in school district 4.0 5.0 0.7 156.0 [12.01] [13.62] [2.92]

Share of industrial employment (%) (from 1869 census)

19.2 22.7 8.9 65.0 [13.8] [13.9] [6.3]

Distance to railroad (km) 44.8 20.9 115.6 0.0 [75.44] [22.15] [120.27]

Secondary school slots within 50 km 191.2 220.1 105.2 920.9 [188.4] [201.9] [100.8]

Literacy content of labor market (boys) 0.241 0.247 0.224 0.358 [0.041] [0.043] [0.029]

Literacy content of labor market (girls) 0.092 0.105 0.053 0.186 [0.037] [0.032] [0.024]

Note: Core provinces are Lower Austria, Upper Austria, Salzburg, Styria, Carinthia, Carniola, the Austrian Littoral, Tyrol and Vorarlberg, Bohemia, Moravia and Silesia. New provinces are Galicia, Bukowina and Dalmatia.

31

Table 2 - Comparison of education variables in core provinces Means t-test p-value

German (N=274) Non-German (N=272)

Average grades per school 2.17 2.17 -0.04 0.96 Classrooms per 1000 school-age children 13.97 10.09 -7.69 0.00 Teachers per 1000 school-age children 15.06 10.34 -8.73 0.00 Spending on staff per child (in fl per year) 2.28 2.05 -3.09 0.00 School coverage 96.98 94.38 -3.16 0.00 *School with minority language of instruction is present 70.40 87.10 2.46 0.02

*Parallel class with minority language of instruction is present 85.20 95.30 2.09 0.04

Percentage of school-age children enrolled 90.10 78.04 -8.68 0.00 Number of steam engines 4.82 5.26 0.38 0.70 Share of industrial employment (%) 24.9 20.4 -3.78 0.00 1(railroad access) 37.50 30.30 1.78 0.08 Distance to railroad 22.12 19.69 -1.28 0.20 Note: *based on 139 districts with at least 100 German students and 100 non-German students.

32

Table 3 - Individual demand for school enrollment (OLS) (i) (ii) (iii) (iv) (v) (vi) (vii)

Dependent variable: Enrolled pupils per 100 covered school-age children

Sample: Full sample Full sample

Full sample

German districts

Non-German districts

Full-coverage districts

Districts with less than full coverage

Secondary school slots -0.011 -0.010 -0.011 -0.003 -0.023 -0.006 -0.016 [0.004] [0.003] [0.002] [0.002] [0.004] [0.002] [0.004]

Literacy content of labor market 126.201 59.030 61.084 15.566 63.560 30.018 105.143 [15.718] [13.648] [10.871] [9.942] [18.317] [15.432] [15.827]

1(Boys) -11.391 -2.097 -2.271 0.075 2.127 -0.403 -5.463 [2.212] [1.850] [1.495] [1.227] [2.820] [2.359] [1.992]

Constant 79.700 86.776 86.559 97.617 80.707 92.658 79.194 [1.811] [1.515] [1.182] [1.216] [1.734] [1.596] [1.781]

N 1092 1092 1092 548 544 506 586 Adjusted R2 0.067 0.609 0.856 0.841 0.856 0.826 0.874 Fixed effects None Diocese District District District District District Note: “Secondary school slots” measures the number of entry-level spots in secondary schools within 50km of each school district. “Literacy content of local labor market “ is a weighted index capturing the demand for literacy in the labor market within 50km of a school district. It is based on data on employment composition in the 1869 census (see Appendix 1 for more detail). Diocese fixed effects in column (ii) are 22 dummy variables for individual bishoprics. The estimation sample is limited to school districts in core provinces. Standard errors in brackets. See text for further details.

33

Table 4 - Interdependence of school supply and economic development Eq. 2a Eq. 2b Eq. 2c Eq. 2d Teachers per 1000

school-age children Grades

per school Staff expenditure

per school-age child Share of industrial

employment Panel A. Full sample - Core provinces (N = 546) Teachers per 1000 school-age children

-0.063 [0.047]

Average number of grades

0.082 [0.303]

Staff expenditure per school-age child

0.130 [0.193]

Share of industrial employment

0.215 2.857 4.875 [4.588] [0.610] [1.190]

1(German) 2.745 -0.220 -0.106 0.221 [0.565] [0.076] [0.152] [0.91]

1(Urban) 0.867 0.026 0.262 0.023 [0.463] [0.059] [0.124] [0.034]

Population dispersion

0.003 [0.005]

Secondary school spots

0.096 [0.042]

Distance to provincial capital

-0.001 [0.001]

Urban population 0.000 [0.001]

Constant 8.329 1.557 0.757 0.350 [1.345] [0.223] [0.366] [0.676]

Panel B. Core provinces, excluding Vienna (N = 545) Teachers per 1000 school-age children

-0.071 [0.045]

Average number of grades

0.125 [0.281]

Staff expenditure per school-age child

0.108 [0.172]

Share of industrial employment

2.340 3.245 5.126 [4.591] [0.639] [1.186]

1(German) 2.567 -0.255 -0.125 0.249 [0.568] [0.081] [0.154] [0.093]

1(Urban) 0.726 0.012 0.240 0.027 [0.458] [0.065] [0.124] [0.034]

Population dispersion

0.005 [0.005]

Secondary school spots

0.074 [0.048]

Distance to provincial capital

-0.001 [0.001]

Urban population 0.000 [0.002]

Constant 7.878 1.451 0.710 0.363 [1.351] [0.236] [0.368] [0.655]

34

Note: “Secondary school slots” measures the number of entry-level spots in secondary schools within 50km of each school district. “Population dispersion” is calculated as number of villages per 1000 school-age children in a district. “Urban population” is the total population in a district, living in towns of more than 5000 inhabitants. Standard errors are in brackets.

35

Table 5 - Regression results for spatial discontinuity regression (IV-2SLS) (i) (ii) (iii) (iv)

Dependent variable Grades per school

Spending on teaching staff per school-age child

Classrooms per 1000 school-age children

Teachers per 1000 school-age children

sub-sample mean 2.191 2.559 10.852 16.684 sub-sample s.d. 0.731 1.32 4.607 7.062 1(majority German district)

0.026 0.502 1.695 3.294 [0.152] [0.262] [0.888] [1.289]

1(minority school) -0.136 -0.444 -1.234 -2.276 [0.141] [0.243] [0.823] [1.194]

1(minority German school)

0.086 1.295 3.136 5.268 [0.199] [0.344] [1.164] [1.689]

Share of industrial employment

1.811 1.556 5.089 -1.773 [2.044] [3.535] [11.974] [17.372]

Urban dummy 0.483 0.128 -1.387 -1.982 [0.209] [0.361] [1.222] [1.773]

Constant 1.198 1.457 5.443 12.748 [0.925] [1.600] [5.418] [7.860]

t-tests: β2+β3=0 0.13 12.26 5.34 6.27 (p-val) 0.72 0.00 0.02 0.01 First-stage F: 13.42 13.42 13.42 13.42 Note: Standard errors are in brackets.

36

Figure1–MapoftheHabsburgEmpireinits1914bordersProvince CapitalLowerAustria ViennaUpperAustria LinzSalzburg SalzburgTyrol InnsbruckVorarlberg BregenzStyria GrazCarinthia KlagenfurtCarniola LjubljanaLittoral TriesteBohemia PragueMoravia BrnoSilesia OpavaGalicia LwowBukowina CzernowitzDalmatia ZadarHungary BudapestTransylvania ClujWesternSlovakia NitraEasternSlovakia KošiceCroatia ZagrebSlavonia OsijekBanat TimisoaraBosnia‐Hercegovina Sarajevo

Note:Notallprovinceswereinexistenceatalltimes.Bosnia‐HercegovinawasanAustrianprotectoratebetween1878–1908,afterwhichitwasannexed.Source:Wikimediacommons.

37

Figure2–Enrollmentandliteracyofthe1830‐1839birthcohort

Note:Averageenrollmentiscalculatedastheaverageenrollmentacrossyears1836‐1851whenthe1830‐1839birthcohortwasinschoolage(6‐11.9yearsold).Two‐letterabbreviationsdenoteindividualprovinces:BO–Bohemia,BU–Bukowina,DA–Dalmatia,GA–Galicia,KI–Carniola(Krain),KS–AustrianLittoral(Küstenland),KT–Carinthia(Kärnten),MA–Moravia,NO–LowerAustria(Nieder‐Österreich),OO–UpperAustria(Ober‐Österreich),SB–Salzburg,SI–Silesia,ST–Styria,TV–Tyrol&Vorarlberg

NOOO

SB

ST

KT

KI

KS

TVBOMA

SI

GABUDA

NOOO

SB

ST

KT

KI

KS

TVBO

MA

SI

GABU

DA0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0.0 0.2 0.4 0.6 0.8 1.0

Literacy rates (1890

 cen

sus)

Average enrollment (1836 ‐ 1851)

Men

Women

38

Figure3–Age‐enrollmentprofileinAustria(1865)andUS(1850‐70)

Note:USdatacomefromClayetal(2012).Austrianprovinces=LowerAustria,UpperAustria,Salzburg,Styria,Carinthia,Tyrol&Vorarlberg.Czechprovinces=Bohemia,Moravia,Silesia.SomeAdriaticprovinces=AustrianLittoralandCarniola.Thepost‐age‐12enrollmentfortheHabsburgempireincludesenrollmentinsecondaryschools,namelyGymnasiaandRealschulen.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

<6 6 7 8 9 10 11 12 13 14 15 16 17

Prop

ortio

n en

rolled

Age

Austrianprovinces

Czechprovinces

SomeAdriaticprovinces

USstates(1850)

USstates(1870)

39

Figure 4

Note: For construction of literacy content, see Appendix 1.