This dissertation consists of four chapters discussing the production process and the measurement of knowledge capital. The first three chapters analyze the productivity and efficiency of the knowledge production process in universities. Concretely, chapters one and two analyze political developments in the context of Swiss universities, namely the impact of third-party funding and the Bologna reform on the productivity of university departments. Chapter three expands the geographic focus beyond Switzerland and presents a global production frontier of top research universities around the world. The last chapter explores how to measure the growth of knowledge capital embodied as labor quality. Such a measure allows evaluating the relevance of labor quality in the contexts of output growth and unemployment rate.