In 1700 four features characterized all of Europe: high fertility, modest educational attainment, the dominance of physical over human capital, and low rates of economic growth. By 1870 in much of Europe modern economic growth was under way. Fertility levels had begun their decline to modern levels, education levels were rising, and human capital was becoming an important income source. These conjunctions suggest that there must be a connection between modern economic growth, fertility decline, and rising human capital. The nature of that connection, however, is disputed. What triggered the switch to the modern demographic regime, with few children despite high incomes? Was this another independent innovation, as significant as the Industrial Revolution? Or was it just a delayed echo of the Industrial Revolution?

The Industrial Revolution and the demographic transition are the two great forces that explain the upward march of modern incomes. So far they have stood independently, the Industrial Revolution preceding the decline in fertility in Europe by more than 100 years. Our instincts suggest that there is some underlying connection. The difficulty is to connect them in a way that also explains fertility differences across countries in the pre-industrial world, the transition period, and the modern world.

The pre-industrial demographic regime

All European societies had high fertility in 1700, but matched by high mortality so that population growth rates remained modest.