Cognitive Skills and Growth
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1 Cognitive Skills and Growth Eric A. Hanushek Stanford University Ludger Woessmann University of Munich, ifo Institute LSE Growth Commission March 2012
2 Plan for Discussion School quality and economic growth - Cognitive skills - Early versus late investment Special policy considerations - Basic skills v. advanced skills - Tertiary education Causation Teacher Quality
3 Human Capital in Empirical Growth Simple cross-country growth regressions - Enrollment rates Wide variety of measurement alternatives - Literacy - School enrollment and attainment
4 Years of Schooling and Long Run Economic Growth
5 Human Capital in Empirical Growth Simple cross-country growth regressions - Enrollment rates Wide variety of measurement alternatives - Literacy - School enrollment and attainment Cognitive skills - Measuring knowledge, not sitting in the classroom - International tests of students performance in cognitive - 12 testing occasions, 36 separate test observations (age levels, subjects)
6 Cognitive Skills and Economic Growth
7 Years of Schooling and Economic Growth With quality control Without quality control
8 Rocket Scientists or Basic Education for All? Should policy concentrate on lowest or highest achievers?
9 Rocket Scientists or Basic Education for All? Should policy concentrate on lowest or highest achievers? - BOTH seem important - Rocket scientists more important in developing countries Does more tertiary education make sense? - Frontier vs. off-frontier - No evidence for developing or developed after considering cognitive skills
10 Estimating the Value of School Reform Reform that increases achievement - 20 years to reach new levels Assume future growth like growth - Holds for former communist members Discount future at 3 percent Growth without education reform at 1.5 percent Calculate present value over lifetime of person born today - 80 year expected life - 40 year working life
11 Present Value of Achievement Gains United Kingdom Achievement change Present value ($billion) % GDP Plus ¼ standard deviation (Australia, Germany) Achievement = Finland (51 PISA points) Eliminate below level 1 (14.4%< 400 PISA) $6, % $14, % $9, %
12 Do Skills Cause Growth? Simple reverse causation Omitted factors - Institutions (openness, property rights) - Regulations - Culture
13 Causation Robustness of cognitive skills and growth - Time period, test measures, country sample, outliers, region IV models: Variation in cognitive skills driven by school systems exit exams, school choice, Catholic schools DiD model I: Skill improvement and improved growth DiD model II: Comparing the impacts of U.S. and home-country education on the U.S. labor market
14 Trends in Test Scores Japan Korea Japan Korea Finland Netherlands N. Zealand Canada Australia UK N. Zealand Norway Australia Netherlands UK Finland France Belgium Canada Sweden Germany USA Sweden France Belgium Norway USA Germany 480 Italy Italy
15 Trends in Growth Rates vs. Trends in Test Scores
16 Spending Policy options
17 Resources and Performance across Countries Math performance in PISA Slovak Rep. Czech Rep. R 2 = 0.01 Poland R 2 = 0.15 Hungary Korea Ireland Greece Finland Japan Netherlands Canada Belgium Switzerland Australia Iceland Denmark Sweden France Germany Austria Norway Spain USA Portugal Italy 400 Mexico Cumulative educational expenditure per student
18 Spending Teacher quality Policy options
19 Teacher Quality Strongest evidence on systematic effects Not related to common measures Observable through both student performance and supervisor ratings
20 W Teacher Effectiveness ( ) reading math Rockoff (2004) New Jersey Nye, Konstantopoulos, and Hedges (2004) Tennessee Rivkin, Hanushek, and Kain (2005) Texas Aaronson, Barrow, and Sander (2007) Chicago 0.13 Kane, Rockoff, and Staiger (2008) New York City Jacob and Lefgren (2008) Undisclosed city Kane and Staiger (2008) Los Angeles Koedel and Betts (2009) San Diego 0.23 Rothstein (2010) North Carolina Hanushek and Rivkin (2010) Undisclosed city 0.11 AVERAGE
21 Teacher Deselection Alternative Estimates of Least Effective Teachers on Student Achievement 1.00 s.d. performance gain Canada Finland % 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness
22 Conclusions Europe Correct to emphasize human capital development - Incorrect to headline quantity - Reduce dropouts to less than 10 percent - 40 percent of year olds with tertiary education Early versus late investment strategies Vocational v. general education Huge benefits to quality Must deal with myopic pressures of fiscal problems
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