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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 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 that are complementary to each other, and the high-performer effect is larger in poorer countries.
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Economic development in Latin America has trailed most other world regions over the past four decades despite its relatively high initial development and school attainment levels. This puzzle can be resolved by considering the actual learning as expressed in tests of cognitive skills, on which Latin American countries consistently perform at the bottom. In growth models estimated across world regions, these low levels of cognitive skills can account for the poor growth performance of Latin America. Given the limitations of worldwide tests in discriminating performance at low levels, we also introduce measures from two regional tests designed to measure performance for all Latin American countries with internationally comparable income data. Our growth analysis using these data confirms the significant effects of cognitive skills on intra-regional variations. Splicing the new regional tests into the worldwide tests, we also confirm this effect in extended worldwide regressions, although it appears somewhat smaller in the regional Latin American data than in the worldwide data.
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Spurred by court rulings requiring states to increase public-school funding, the United States now spends more per student on K-12 education than almost any other country. Yet American students still achieve less than their foreign counterparts, their performance has been flat for decades, millions of them are failing, and poor and minority students remain far behind their more advantaged peers. In this book, Eric Hanushek and Alfred Lindseth trace the history of reform efforts and conclude that the principal focus of both courts and legislatures on ever-increasing funding has done little to improve student achievement. Instead, Hanushek and Lindseth propose a new approach: a performance-based system that directly links funding to success in raising student achievement. This system would empower and motivate educators to make better, more cost-effective decisions about how to run their schools, ultimately leading to improved student performance. Hanushek and Lindseth have been important participants in the school funding debate for three decades. Here, they draw on their experience, as well as the best available research and data, to show why improving schools will require overhauling the way financing, incentives, and accountability work in public education.
Academic achievement --- Public schools --- Finance. --- Finance --- Public schools - United States - Finance --- Academic achievement - United States
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