Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation

Eric Hanushek and Ludger Woessmann

No 4575, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate whether a causal interpretation of the robust association between cognitive skills and economic growth is appropriate and whether cross-country evidence supports a case for the economic benefits of effective school policy. We develop a new common metric that allows tracking student achievement across countries, over time, and along the within-country distribution. Extensive sensitivity analyses of cross-country growth regressions generate remarkably stable results across specifications, time periods, and country samples. In addressing causality, we find, first, significant growth effects of cognitive skills when instrumented by institutional features of school systems. Second, home-country cognitive-skill levels strongly affect the earnings of immigrants on the U.S. labor market in a difference-in-differences model that compares home-educated to U.S.-educated immigrants from the same country of origin. Third, countries that improved their cognitive skills over time experienced relative increases in their growth paths. From a policy perspective, the shares of basic literates and high performers have independent significant effects on growth, and the estimates suggest that the high-performer effect is larger in poorer countries.

Keywords: economic growth; cognitive skills; human capital (search for similar items in EconPapers)
JEL-codes: H4 I2 J3 J61 O1 O4 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2009-11
New Economics Papers: this item is included in nep-edu, nep-fdg, nep-lab, nep-ltv and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (161)

Published - published in: Journal of Economic Growth, 2012, 17 (4), 267-321

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Related works:
Journal Article: Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation (2012)
Working Paper: Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation (2012)
Working Paper: Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation (2009)
Working Paper: Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation (2009)
Working Paper: Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation (2009)
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