Schooling, nation building and industrialization

We consider a Gellnerian model to study the transformation of a two-region state into a nation state. Industrialization requires the elites to finance schooling. The implementation of statewide education generates a common national identity, which enables cross-regional production, while regional education does not. We show that statewide education is chosen when cross-regional production opportunities and productivity are high, especially when the same elite holds power at both geographical levels. By contrast, a dominant regional elite might prefer regional schooling, even at the loss of large cross-regional production opportunities if it is statewide dominated. The model is consistent with evidence for five European countries in 1860–1920.