Dynamic Forces in Educational Development: A long-run comparative view of France and Germany in the 19th and 20th centuries

Since World War II, much of the economic growth literature has focused on the contribution of human capital to national development. Two assumptions have remained largely unexamined: (i) economic stability results from economic growth, and (ii) investments in human capital result in economic growth ( ceteris paribus ). This paper questions this education-stability link by examining longitudinal data from France and Germany across 170 years. Results indicate that human capital investment prior to 1945 was a response to economic growth. It is only since 1945 that human capital investments appear to drive economic growth. A shift since 1973 leads to doubts as to whether the post-war human capital-driven growth is being sustained. The results raise the question of whether human capital investment might not be as much a consequence as it is a cause of economic stability in the course of time.