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The Knowledge Capital of NationsEducation and the Economics of Growth$
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Eric A. Hanushek and Ludger Woessmann

Print publication date: 2015

Print ISBN-13: 9780262029179

Published to MIT Press Scholarship Online: September 2015

DOI: 10.7551/mitpress/9780262029179.001.0001

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The Economic Value of Educational Reform

The Economic Value of Educational Reform

(p.157) 7 The Economic Value of Educational Reform
The Knowledge Capital of Nations

Eric A. Hanushek

Ludger Woessmann

The MIT Press

The prior chapters emphasize that cognitive skills have strong effects on long-run economic growth – but do not tell directly the economic value of any improvements in educational outcomes. This chapter uses the previously estimated growth models to project the economic impact of different scenarios of school improvements. An important aspect highlighted by the projections is not only the time path of economic gains but also the dynamic nature of human capital and growth. The analysis indicates the present value of country-specific gains from various improvement scenarios including a 25-point gain on PISA scores, bringing each country to the level of Finland, and bringing all up to minimum proficiency. Additionally, this chapter shows the difference in long-run projections that come from neoclassical growth models as opposed to endogenous growth models along with the sensitivity of the projections to key growth parameters.

Keywords:   Projections, Finland, Present value, Proficiency, School improvement, Educational reform, PISA

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