Modern secondary education and economic performance: the introduction of the Gewerbeschule and Realschule in nineteenth-century Bavaria

Do new school types focusing on practical and business-related knowledge lead to increased economic performance? To analyze this question, this paper examines the introduction of two types of modern secondary education, the Gewerbeschule and its successor, the Realschule, in nineteenth-century Bavaria. Since opening of these schools is arguably endogenous – as it were mainly the prosperous, big cities that opened one – the estimated treatment effect capturing the economic influence of the Gewerbeschule/Realschule will lead to biased results. To alleviate this bias, I adopt propensity score matching to compare relatively alike counties with and without these schools. Using historical county-level data on business formations, tax revenues, employment structure, and patent holdings, OLS regression analysis shows that the opening of a modern secondary school is in general positively associated with economic performance several years later.