Journal Article -- "Education and Economic Growth"

By: Eric A. Hanushek, Dean T. Jamison, Eliot A. Jamison, & Ludger Woessmann

Education Next, Vol. 8, No. 2, 62-70 (2008)

Evidence of a “clear, strong relationship” between cognitive skills and economic growth should encourage continued reform efforts to boost mathematics and science test scores, according to a new study by Hanushek, Jamison, Jamison & Woessmann published in the most recent issue of Education Next.

The authors argue for school reform in order to increase national economic competitiveness. Their study explores average years of schooling and average math and science test scores as an indicator of a county’s human capital. The key conclusion of the article is a correlation between human capital (economic growth) and years of schooling as well as test scores – both used as indicators of cognitive skill.

The authors contend that a country’s average performance on math and science scores provides a more direct measure of human capital, as compared to years of schooling. This is based on a presentation of average levels of cognitive skill for those who will soon enter that country’s workforce. Using the average annual growth rate in a country’s gross domestic product (GDP) per capita, Hanushek et al. compared 50 countries, examining both years of school attainment and average cognitive skills as indicators of growth. They find, “…higher levels of cognitive skill appear to play a major role in explaining international differences in economic growth.”

In addition to exploring the impact of years of education and average level of cognitive skill, the authors also examined variance of per capita GDP average annual growth by four other variables: fertility, geography, security of a country’s property rights, and openness to international trade. Other economic research has suggested all four of these factors can impact a country’s economic growth. However, the authors found that fertility rates and common geographical proxies were not significantly associated with economic growth. When property rights and openness to international trade were taken into account, the authors found the positive effect of cognitive skills on economic growth to be somewhat smaller but claim, “…the strong effect of cognitive skills remained clear.”

However, the analysis presented in this article never adequately addresses the underlying causal inferences. Is there a direct causal relationship between cognitive skills and human capital or is there some unknown or unmeasured factor that was not accounted for but influences both cognitive skills and per capita GDP growth? Equally important, Hanushek et al. do not provide a clear, convincing explanation for their preferred causal direction. It is unclear why should readers conclude that cognitive skills themselves are not caused by increased economic growth, rather than visa versa.

Key Words: economics of education • global competitiveness • math and science performance • school reform• K-12 education