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Eric A. Hanushek Stanford University

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1 Eric A. Hanushek Stanford University
South Asia Regional Conference on Education Quality Schooling Quality and Economic Growth Eric A. Hanushek Stanford University

2 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

3 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

4 School Expectancy, 2001 South and West Asia 8.6 7.6 7.1 6.4 Total Male
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 Central Asia 11.4 11.5 11.3 East Asia and the Pacific 10.9 10.5 Latin America and the Caribbean 13.0 13.2 North America and Western Europe 16.3 15.4 16.8 South and West Asia 8.6 7.6 Sub-Saharan Africa 7.1 6.4

5 Cognitive Skills: International Student Achievement Tests
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

6 International Achievement
Source: Hanushek and Wößmann (2007).

7 International Achievement

8 International Achievement

9 Education Quality and Economic Growth

10 Without quality control
Quantity of Schooling With quality control Without quality control

11 Education Quality and Openness
Estimated effect of test scores on average annual rate of growth of real GDP per capita in , depending on degree of openness to international trade of a country. Source: Hanushek and Wößmann (2007).

12 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

13 Improved GDP with Moderately Strong Knowledge Improvement (0.5 s.d.)

14 Other Benefits of Improved Cognitive Skills
Individual earnings Developed countries Developing countries

15 Estimated Returns to Cognitive Skills
*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.

16 Other Benefits of Improved Cognitive Skills
Individual earnings Developed countries Developing countries Income distribution

17 Inequality of Educational Quality and of Earnings

18 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

19 Basic Skills Grade 9 37 % Fully literate 5 %

20 Basic Skills Grade 9 22% Fully literate 8%

21 Basic Skills Grade 9 28% Fully literate 13%

22 Distribution of Education Quality
2.7% Estonia 21.9% Taiwan 8.2% USA 7.3% 66.2% Brazil 81.8% Peru Source: Hanushek and Wößmann (2007).

23 Cognitive Skill Production
Families Peers Community and neighborhood Schools Policy largely around schools but other interventions such as health programs

24 Resource Policies Little evidence of success Cross country evidence

25 Expenditure per Student and Student Performance across Countries

26 Resource Policies Little evidence of success Cross country evidence
Within country – developed Within country – developing

27 Resource Policies No expectation within current incentive structure
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

28 Teacher Quality Strongest evidence on systematic effects
Not related to common measures Observability

29 Supply Side Incentives
Changing Institutions Application in both developed and developing countries Interpretation – work largely through changing teacher quality

30 Institutional Reforms Supported by Evidence
Centralized exams Accountability Autonomy/decentralization Choice Direct performance incentives

31 Autonomy and Central Exams or Accountability

32 Demand Side Incentives
Application mainly in developing countries Motivated by access/attainment issues Work through changing student and family behavior Programs carefully evaluated

33 Range of programs Conditional cash transfers Fee reduction
Mexico, Brazil, Columbia, Nicaragua Fee reduction Indonesia, Cambodia, Taiwan, Kenya* Food and nutrition supplements Bangladesh, India, Kenya

34 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

35 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

36 Information and Feedback
Assessments very bad Limited national assessments International assessments problematic No regular evaluation function Local variation in effectiveness No simple solutions

37 Conclusions School quality is not easily changed
Focus on Incentives but be careful Information shortage critical Student performance Program feedback

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