This paper was presented at the 52nd Panel Meeting of Economic Policy in Rome. We thank four anonymous referees, Luigi Pistaferri, Fabiano Schivardi and the other panel participants for their comments. Woessmann gratefully acknowledges the support and hospitality provided by the W. Glenn Campbell and Rita Ricardo-Campbell National Fellowship of the Hoover Institution, Stanford University, as well as support by the Pact for Research and Innovation of the Leibniz Association. Hanushek was supported by the Packard Humanities Institute.
How much do educational outcomes matter in OECD countries?
Article first published online: 19 JUL 2011
© CEPR, CES, MSH, 2011
Volume 26, Issue 67, pages 427–491, July 2011
How to Cite
Hanushek, E. A. and Woessmann, L. (2011), How much do educational outcomes matter in OECD countries?. Economic Policy, 26: 427–491. doi: 10.1111/j.1468-0327.2011.00265.x
The Managing Editor in charge of this paper was Tullio Jappelli.
- Issue published online: 19 JUL 2011
- Article first published online: 19 JUL 2011
Existing growth research provides little explanation for the very large differences in long-run growth performance across OECD countries. We show that cognitive skills can account for growth differences within the OECD, whereas a range of economic institutions and quantitative measures of tertiary education cannot. Under the growth model estimates and plausible projection parameters, school improvements falling within currently observed performance levels yield very large gains. The present value of OECD aggregate gains through 2090 could be as much as $275 trillion, or 13.8% of the discounted value of future GDP for plausible policy changes. Extensive sensitivity analyses indicate that, while different model frameworks and alternative parameter choices make a difference, the economic impact of improved educational outcomes remains enormous. Interestingly, the quantitative difference between an endogenous and neoclassical model framework – with improved skills affecting the long-run growth rate versus just the steady-state income level – matters less than academic discussions suggest. We close by discussing evidence on which education policy reforms may be able to bring about the simulated improvements in educational outcomes.
— Eric A. Hanushek and Ludger Woessmann