How Much Do Educational Outcomes Matter in OECD Countries?
Issue/Topic: Economic/Workforce Development
Author(s): Hanushek, Eric; Woessmann, Ludger
Organization(s): Hoover Institution; Ifo Institute for Economic Research and CESifo
Publication: National Bureau of Economic Research Working Paper
Published On: 1/1/2010
Existing growth research provides little explanation for the very large differences in long-term growth performance across the Organization for Economic Co-operation and Development (OECD) countries. Most of the robust results that exist refer either to the importance of basic economic institutions or to policies that affect short- to medium-term growth in developed countries. This study focuses on whether cognitive skills also matter in understanding growth differences among rich countries.
To examine whether improved human capital, measured by cognitive skills, has the potential for substantial improvements in the long term economic well-being of OECD countries
Education policy is closely associated with the long-term growth potentials of countries across the Organization for Economic Co-operation and Development (OECD).
- Cognitive skills are important for economic growth. Yet simply knowing that skill differences are important does not provide a guide to policies that might promote more skills. Indeed, a wide variety of policies have been implemented within various countries without much evidence of success in either achievement or economic terms.
- Basic skills are robustly related to OECD-country growth. When cognitive skills are accounted for, tertiary attainment is not significantly associated with long-run growth differences across OECD countries.
- A modest goal of having all OECD countries boost their average PISA scores by 25 points (one-quarter standard deviation) implies an aggregate gain of OECD GDP [Gross Domestic Product] of $90-123 trillion. More aggressive goals, such as bringing all students to a level of minimal proficiency for the OECD or bringing all OECD countries to the level reached by Finland today, would imply aggregate GDP increases beyond $200 trillion, according to historical growth relationships. The gains from education reform far exceed the level of stimulus funds in the current global recession.
- The research does not support a simplistic view of the argument, 'money never matters.' Nor does it say that 'money cannot matter.' It simply underscores the fact that there has historically been a set of decisions and incentives in schools that have blunted any impacts of added funds, leading to inconsistent outcomes. That is, more spending on schools has not led reliably to substantially better results.
- The performance of a system is affected by the incentives that actors face. That is, if the actors in the education process are rewarded (extrinsically or intrinsically) for producing better student achievement, achievement is likely to improve. The key to improvement appears to lie in better incentives -- incentives that will lead to managerial decisions keyed to student achievement and that will promote strong schools with high-quality teachers. A promising candidate for improvement is the specific form of accountability that aims incentives directly at teachers.
- Evidence from both within and across countries points to the positive impact of competition among schools, of accountability and student testing, and of local school autonomy in decision making. Research on these policies, separately and in combination, indicates some continuing uncertainty about the magnitude of any effects, but does support more aggressive attention to these in setting school policies.
- Without minimizing the need to deal with current unemployment conditions, paying attention to issues of longer-run economic growth may be more important for the welfare of nations.
- Many of the traditional policies of simply providing more funds for schools or of adding specific resources such as smaller classes, do not provide much hope for significant improvements in student achievement.
- A growing body of research shows that teacher quality is a primary driver of student achievement, but that differences in quality are not closely related to teacher education and experience. Because teacher quality is not easily measured and regulated, effective policies to improve quality appear to necessitate more careful attention to the incentives faced by schools and teachers.
- The economic gains from education reform are surely not reaped within matters of one or two political legislation periods. They rather require a long-run perspective that fully considers the time horizon of a child born today.
To access the full study: http://www.cepr.org/meets/wkcn/9/979/papers/hanushek_woessmann.pdf
International participants in 12 tests of math, science, or reading
Year data is from:
1964 - 2003
Data Collection and Analysis:
Analysis of 12 international tests of math, science, or reading that were administered to a voluntarily participating group of countries; the tests were given over the past 45 years in order to develop a single comparable measure of skills for each country that can be used to index skills of people in the labor force
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