Show Summary Details

Page of

Printed from Oxford Research Encyclopedias, Economics and Finance. Under the terms of the licence agreement, an individual user may print out a single article for personal use (for details see Privacy Policy and Legal Notice).

date: 08 November 2024

Education and Economic Growthlocked

Education and Economic Growthlocked

  • Eric A. HanushekEric A. HanushekHoover Institution, Stanford University
  • , and Ludger WoessmannLudger Woessmannifo Institute, Ludwig Maximilian University of Munich

Summary

Economic growth determines the future well-being of society, but finding ways to influence it has eluded many nations. Empirical analysis of differences in growth rates reaches a simple conclusion: long-run growth in gross domestic product (GDP) is largely determined by the skills of a nation’s population. Moreover, the relevant skills can be readily gauged by standardized tests of cognitive achievement. Over the period 1960–2000, three-quarters of the variation in growth of GDP per capita across countries can be accounted for by international measures of math and science skills. The relationship between aggregate cognitive skills, called the knowledge capital of a nation, and the long-run growth rate is extraordinarily strong.

There are natural questions about whether the knowledge capital–growth relationship is causal. While it is impossible to provide conclusive proof of causality, the existing evidence makes a strong prima facie case that changing the skills of the population will lead to higher growth rates.

If future GDP is projected based on the historical growth relationship, the results indicate that modest efforts to bring all students to minimal levels will produce huge economic gains. Improvements in the quality of schools have strong long-term benefits.

The best way to improve the quality of schools is unclear from existing research. On the other hand, a number of developed and developing countries have shown that improvement is possible.

Subjects

  • Economic Development
  • Labor and Demographic Economics
  • Macroeconomics and Monetary Economics

You do not currently have access to this article

Login

Please login to access the full content.

Subscribe

Access to the full content requires a subscription