The Rise of the Knowledge Economy

The roots of sustained growth in England are increasingly located in the period from the Scientific Revolution to the Age of the Enlightenment. Productivity increases have been suggestively linked to the development of communication infrastructures and the diffusion of useful knowledge. In this paper, we isolate the empirical impact of the evolution of the postal system in England and Wales over the period 1570-1769 on interpersonal communication exchanges in the context of the Republic of Letters. We exploit a quasi-natural experiment due to a postal system reform leading to the opening of the pre-existing network to the public in 1635. We build a novel geo-referenced database involving about 56,000 letters by roughly 9,000 correspondents. Using difference-in-differences, we show that the reform led to a substantial increase in interpersonal communications. The main findings are confirmed by event-study analyses and an instrumental-variables strategy, bolstering confidence in a causal interpretation of our estimates. Looking at the patterns of interactions, we detect a sizable intensification of communications between scholars and professionals. We collect the content of around 30,000 letters, classify their topics exploiting unsupervised text analysis, and detect a sizable impact of the reform on the evolution of communications related to useful knowledge. Finally, drawing on biographical data, we document the effects on innovation activities. Taken together, the findings provide the first systematic evidence of the role of the postal system for the rise of the Knowledge Economy in England on its way to the Industrial Revolution in the early modern period.