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 analyse this question, this article examines the introduction of two types of modern secondary education, the Gewerbeschule and its successor, the Realschule, in nineteenth‐century Bavaria. Since the opening of these schools is arguably endogenous—as it was mainly the large, prosperous 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, propensity score matching is adopted to compare relatively similar counties with and without these schools. Using historical county‐level data on tax revenues, business formations, employment structure, and patent holdings, ordinary least squares regression analysis shows that the opening of a modern secondary school is in general positively associated with economic performance several years later.