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