The Little Divergence is the process of differential economic growth within Europe in the period between 1300 and 1800, during which the North Sea Area developed into the most prosperous and dynamic part of the Continent. We test various hypotheses about the causes of the Little Divergence, using new data and focusing on trends in GDP per capita. The results are that institutional changes (in particular the rise of active Parliaments), human capital formation and structural change are the primary drivers of the growth that occurred, which contrast sharply with previous findings by Robert Allen (who however focused on real wages as dependent variable). We also test for the role of religion (the spread of Protestantism): this has affected human capital formation, but does not in itself have an impact on growth. Moreover, we find an insignificant effect of the land-labour ratio, which shows the limitations of the Malthusian model for understanding the Little Divergence.

We examine the effect of technical change on human capital formation during England's Industrial Revolution. Using the number of steam engines installed by 1800 as a synthetic indicator of technological change and occupational statistics to measure working skills (using HISCLASS), we establish a positive correlation between the use of steam engines and the share of skilled workers at the county level. We use exogenous variation in carboniferous rock strata (containing coal to fuel the engines) to show that the effect was causal. While technological change stimulated the formation of working skills, it had an overall negative effect on the formation of primary education, captured by literacy and school enrolment rates. It also led to higher gender inequality in literacy.

We use occupational titles from English parish registers in an attempt to test the deskilling hypothesis, i.e. the notion that England's Industrial Revolution was mainly skill saving. We code the occupational titles of over 30,000 male workers according to the skillcontent of their work (using HISCLASS) to track the evolution of working skills in England between 1550 and 1850. Although we observe a minor rise in the share of 'high-quality workmen' deemed necessary by Mokyr and others to facilitate the Industrial Revolution, such as joiners, turners, and wrights, we also find considerable growth in the share of unskilled workers, from 20% in around 1700 to 39% in around 1850, fed mainly by falling shares of semiskilled blue-collar workers, such as tailors, shoemakers, and weavers. This supports the view that England's Industrial Revolution was not only skill saving on average but also involved a proletarianization of the English workforce.