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

Eric Hanushek and Ludger Woessmann

No 08-015, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: We provide evidence that the robust association between cognitive skills and economic growth reflects a causal effect of cognitive skills and supports the economic benefits of effective school policy. We develop a new common metric that allows tracking student achievement across countries, over time, and 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, homecountry cognitive-skill levels strongly affect the earnings of immigrants on the U.S. labor market in a difference-in-differences model that compares home country-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 that are complementary to each other, and the high-performer effect is larger in poorer countries.

Keywords: Human Capital; Economic Growth; Productivity; Education; Cognitive Skills (search for similar items in EconPapers)
JEL-codes: J24 O47 (search for similar items in EconPapers)
Date: 2009-01
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Citations: View citations in EconPapers (156)

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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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