Das Human Kapital

Brown University Working Paper No. 2000-17

49 Pages Posted: 31 Jul 2003

See all articles by Oded Galor

Oded Galor

Brown University - Department of Economics; Centre for Economic Policy Research (CEPR)

Omer Moav

University of Warwick - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: July 15, 2003


This paper hypothesizes that the demise of the 19th century's European class structure reflects a deliberate transformation of society orchestrated by the capitalists. Contrary to conventional wisdom, it argues that the demise of this class structure was an outcome of a cooperative, rather than divisive process. The research suggests that the transition from this class structure may be viewed as the outcome of an optimal reaction by the capitalists to the increasing importance of human capital in sustaining their profit rates. The paper argues that the process of capital accumulation gradually intensified the importance of skilled labor in the production process and generated an incentive for investment in human capital. Due to the complementarity between physical and human capital in production, the capitalists were among the prime beneficiaries of the accumulation of human capital by the masses. They therefore had the incentive to support public education that would sustain their profit rates and would improve their economic well-being, although it would ultimately undermine their dynasty's position in the social ladder. The research suggests that Karl Marx's highly influential prediction about the inevitable class struggle due to declining profit rates stemmed from an under appreciation of the role that human capital would play in the production process. The basic premise of this research, regarding the positive attitude of capitalists towards education reforms, is supported empirically by a newly constructed data set of the voting patterns on England's education reform proposed in the Balfour Act of 1902.

Keywords: Industrial Revolution, Human Capital, Growth, Class Structure, Education Reforms

JEL Classification: B10, O10, O40, N30

Suggested Citation

Galor, Oded and Moav, Omer, Das Human Kapital (July 15, 2003). Brown University Working Paper No. 2000-17, Available at SSRN: https://ssrn.com/abstract=246295 or http://dx.doi.org/10.2139/ssrn.246295

Oded Galor

Brown University - Department of Economics ( email )

Providence, RI 02912
United States

HOME PAGE: http://www.econ.brown.edu/fac/Oded_Galor/

Centre for Economic Policy Research (CEPR)

United Kingdom

HOME PAGE: http://www.econ.brown.edu/fac/Oded_Galor/

Omer Moav (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

HOME PAGE: http://www2.warwick.ac.uk/fac/soc/economics/staff/academic/moav

Centre for Economic Policy Research (CEPR)

United Kingdom

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