South Asia Regional Conference on

Education Quality Schooling Quality and Economic Growth

Eric A. HanushekStanford University

Importance of Human Capital Policy Focus Traditional emphasis on school attainment Development of access programs

Centerpiece of Millennium Development Goals Education for All initiative

Some clear successes and some continuing challenges

New evidence that QUALITY is the primary issue

Overview of Discussion

Importance of quality (cognitive skills) Economic growth Individual earnings Distributional outcomes

Policy actions and reform Resource policies Supply side incentives Demand side incentives

Importance of information

School Expectancy, 2001    Total Male Female

World     10.3   10.7   9.8  

                 

Countries in transition     12.5   12.2   12.6  

Developed countries     15.9   15.2   16.4  

Developing countries     9.5   10.1   8.9  

                 

Arab States     10.0   10.6   9.4  

Central and Eastern Europe     12.7   12.7   12.7  

Central Asia     11.4   11.5   11.3  

East Asia and the Pacific     10.9   11.3   10.5  

Latin America and the Caribbean     13.0   12.7   13.2  

North America and Western Europe

    16.3   15.4   16.8  

South and West Asia     8.6   9.5   7.6  

Sub-Saharan Africa     7.1   7.6   6.4  

Measuring knowledge, not sitting in the classroom International agencies have conducted many

international tests of students’ performance in cognitive skills since mid-1960s

12 testing occasions 36 separate test observations (age levels, subjects)

Require rescaling to obtain combined measure Adjust mean and variance of separate

Cognitive Skills: International Student Achievement Tests

International Achievement

Source: Hanushek and Wößmann (2007).

International Achievement

International Achievement

Education Quality and Economic

Growth

Quantity of Schooling

Without quality control

With quality control

Education Quality and Openness

0

0.5

1

1.5

2

2.5

3

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Effect of test score on growth

Openness

Estimated effect of test scores on average annual rate of growth of real GDP per capita in 1960-2000,

depending on degree of openness to international trade of a country. Source: Hanushek and Wößmann (2007).

Implications of Reform

Speed of reform 10, 20, 30 years

Magnitude of reform ½ standard deviation

Half distance of Mexico, Indonesia, Chile to OECD U.S., Germany to East Asian

Full impact felt 35 years after completion of reform

Improved GDP with Moderately Strong

Knowledge Improvement (0.5 s.d.)

0%

10%

20%

30%

40%

year

per

cen

t ad

diti

on

s to

GD

P

20-year reform 30-year reform typical education spending

Other Benefits of Improved Cognitive Skills Individual earnings

Developed countries Developing countries

Estimated Returns to Cognitive SkillsCountry Study Estimated effecta Notes

Ghana Glewwe (1996) 0.21**-0.3** (government) 0.14-0.17 (priv.)

Alternative estimation approaches yield some differences; math effects shown generally more important than reading effects, and all hold even with Raven’s test for ability.

Ghana Jolliffe (1998) 0.05-0.07* Household income related to average math score with relatively small variation by estimation approach; effect is only observed with off-farm income, and on-farm income is not significantly related to cognitive skills.

Ghana Vijverberg (1999) ? Income estimates for math and reading with nonfarm self-employment; highly variable estimates (including both positive and negative effects) but effects not generally statistically significant.

Kenya Boissiere, Knight, and Sabot (1985); Knight and Sabot (1990)

0.19**-0.22** Total sample estimates: small variation by primary and secondary school leavers.

Morocco Angrist and Lavy (1997)

? Cannot convert to standardized scores because use indexes of performance; French writing skills appear most important for earnings, but results depend on estimation approach.

Pakistan Alderman, Behrman, Ross, and Sabot (1996)

0.12-0.28* Variation by alternative approaches and by controls for ability and health; larger and more significant without ability and health controls.

Pakistan Behrman, Ross, and Sabot (forthcoming)

0.25 Estimates of structural model with combined scores for cognitive skill; significant effects of combined math and reading scores which are instrumented by school inputs

South Africa

Moll (1998) 0.34**-0.48** Depending on estimation method, varying impact of computation; comprehension (not shown) generally insignificant.

Tanzania Boissiere, Knight, and Sabot (1985); Knight and Sabot (1990)

0.07-0.13* Total sample estimates: smaller for primary than secondary school leavers.

*significant at 0.05 level; **significant at 0.01 level. a. Proportional increase in wages from a one standard deviation increase in measured test scores.

Other Benefits of Improved Cognitive Skills Individual earnings

Developed countries Developing countries

Income distribution

Inequality of Educational Quality and of Earnings

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1.3 1.5 1.7 1.9

FIN

Earnings inequality

Test score inequality

DEN

USA

CAN

UK

SWI

IRE

AUS

BELSWE

GER

NET

NOR

Conclusions on Economic Impacts Powerful effects of cognitive skills on

individual earnings, on the distribution of income, and on economic growth Support for causal interpretation

The current situation in developing countries is much worse than generally pictured on the basis just of school enrollment and attainment

Basic SkillsGhana

never enroll dropout gr 1-5

dropout gr 5-9 finish gr 9 w/o basic skill

finish gr 9 w/ basic skill

Fully literate5 %

Grade 937 %

Basic SkillsBrazil

never enroll dropout gr 1-5

dropout gr 5-9 finish gr 9 w/o basic skill

finish gr 9 w/ basic skill

Fully literate8%

Grade 922%

Basic Skills

Morroco

never enroll dropout gr 1-5

dropout gr 5-9 finish gr 9 w/o basic skill

finish gr 9 w/ basic skill

Grade 928%

Fully literate13%

Distribution of Education Quality

Source: Hanushek and Wößmann (2007).

8.2% 7.3%USA

2.7% Estonia

21.9%Taiwan

81.8%Peru

66.2%Brazil

Cognitive Skill Production

Families Peers Community and neighborhood Schools

Policy largely around schools but other interventions such as health programs

Resource Policies

Little evidence of success Cross country evidence

Expenditure per Student and Student Performance across Countries

350

400

450

500

550

0 10000 20000 30000 40000 50000 60000 70000 80000

Math performance in PISA 2003

Cumulative educational expenditure per student

Mexico

Belgium

Iceland

FranceSweden

SwitzerlandDenmark

AustriaNorway

USA

ItalyPortugal

Spain

Korea

GermanyIreland

Czech Rep.

HungaryPoland

Slovak Rep.

Greece

Finland

NetherlandsCanada

Japan

Australia

R2 = 0.15

R2 = 0.01

Resource Policies

Little evidence of success Cross country evidence Within country – developed Within country – developing

Resource Policies

Little evidence of success Cross country evidence Within country – developed Within country – developing

Does not say “resources never have effect” Does not say “resources cannot have effect”

No expectation within current incentive structure

Teacher Quality

Strongest evidence on systematic effects

Not related to common measures

Observability

Supply Side Incentives

Changing Institutions Application in both developed and developing

countries Interpretation – work largely through

changing teacher quality

Institutional Reforms Supported by Evidence

Centralized exams

Accountability

Autonomy/decentralization

Choice

Direct performance incentives

No

Yes

No

Yes

55.5

76.2

23.7

0.00

10

20

30

40

50

60

70

80

Central exams

School autonomy over teacher salaries

Math performance in TIMSS/TIMSS-R test scores (relative to lowest category)

Autonomy and Central Exams or Accountability

Demand Side Incentives

Application mainly in developing countries Motivated by access/attainment issues

Work through changing student and family behavior

Programs carefully evaluated

Range of programs

Conditional cash transfers Mexico, Brazil, Columbia, Nicaragua

Fee reduction Indonesia, Cambodia, Taiwan, Kenya*

Food and nutrition supplements Bangladesh, India, Kenya

Results of Demand Side Incentives Aimed generally at encouraging

attendance/completion Rewards linked to being in school Supports Education for All

Each has positive (and significant) impact on attendance and attainment

But, with exception of Kenyan merit scholarship, little or no apparent impact on achievement

Conclusions on Demand Side Incentives Incentives have impact on behavior Requires care in structuring incentives

Ensure that goals are correct Do not assume other outcomes

May be perverse effects Access and quality trade-offs

Access viewed as “equity” Equity not supported by low quality

Information and Feedback

Assessments very bad Limited national assessments International assessments problematic

No regular evaluation function Local variation in effectiveness No simple solutions

Conclusions

School quality is not easily changed

Focus on Incentives but be careful

Information shortage critical Student performance Program feedback