What Accounts for the US Ascendancy to Economic Superpower by the Early Twentieth Century? The Morrill Act–Human Capital Hypothesis

Abstract

Maddison’s international panel data show that technically it was the faster growth rate of the US economy that led to its overtaking the United Kingdom as economic superpower. We explore the contributing factors. Identifying the land-grant college system triggered by the 1862/1890 Morrill Acts (MAs) as a major contributor, we develop this hypothesis theoretically and test it via difference-in-differences regression analyses viewing the MAs as the experiment, the United States or US states as treatment groups, and the United Kingdom as the chief control group in the country-level comparisons. Using national and state-level data, we estimate that the MAs produced sizeable educational and economic returns that catapulted the United States into its leading status.