EDUCATIONAL OUTCOMES IN OECD COUNTRIES
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5.2. Results of base scenarios
We start with the results of the baseline projection model in an endogenous-growth
framework for the three education reform scenarios. All calculations are in real
(inflation-adjusted) terms - 2010 dollars under purchasing power parity.
5.2.1. Scenario I: Increase average performance by 25 PISA points
A simple starting point is to consider the economic impact on OECD countries of a
0.25 standard deviation improvement, equivalent to a 25 point increase on PISA scores.
The reform policy is begun in 2010 and on average yields 25 point higher scores in 2030
that remain permanently at that level for all subsequent students.18
A policy like this is uniform across countries, so the relative improvement is the same
for all countries.19 Figure 4 provides a summary of the marginal impact on GDP for
each year into the future. While there are no impacts initially until higher-achieving
students start becoming more significant in the labor market, GDP will be more than 3
percent higher than what would be expected without improvements in human capital as
early as 2041. (The figure also shows a 95 percent confidence bound of 1.9-4.1 percent
higher GDP, based on the relevant 95 percent confidence bounds for the regression
coefficient in column (2) of Table 2. By the end of expected life in 2090 for the person
born in 2010, GDP per capita would be expected to be over 26 percent above the
“education as usual” level.
The magnitude of such a change is best understood with an example. In the absence of
changes in educational policy, France would be expected to have a GDP (in 2010 USD)
of $3,606 billion in 2041. If on the other hand it achieved the improvement in cognitive
skills that took it from an average PISA score of 505 to 530, total GDP would be
expected to be $3,715 in 2041, or $108 billion higher.20 These calculations illustrate a
simple point: While 3 percent may at first seem like a small change, it is a very large
number when applied to the entire GDP of any of the OECD countries.
These calculations are by themselves misleading, because the impacts of improved
cognitive skills continue to occur far into the future. The 3.0 percent improvement in
2041 rises to a 5.9 percent improvement in 2050, 15.3 percent in 2070, and 26.3 percent
in 2090. These dynamic improvements in the economy yield on-going gains to society,
and the appropriate summary of the impact of educational improvements accumulates
the value of these annual gains.
18 All calculations of PISA scores underlying the following simulations refer to the average performance in math and science
(in line with the underlying growth model, as noted above), averaged over the three PISA cycles 2000, 2003, and 2006 (see
Organisation for Economic Co-operation and Development (2001, 2003, 2004, 2007)). All underlying measures of Gross
Domestic Product (GDP) are in US dollars, measured in purchasing power parities (PPP), expressed in prices of 2010. The
GDP measures were calculated from the most recent measure of GDP in current prices and current PPPs available for all
countries (2007, extracted from http://stats.oecd.org on 10 August 2009), projected to 2010 using OECD estimates of annual
changes in potential GDP and in GDP deflators (Organisation for Economic Co-operation and Development (2009b)).
19 Note that the calculations also assume that the top ranked countries can feasibly improve their scores. The relatively flat
performance of countries such as Japan and Korea that have been at the top for a number of years raises the question about
whether there is room for further improvement or whether there is some sort of ceiling effect in the existing tests. As an
alternative, the next scenario will only assume improvements that do not go beyond the current top performer.
20 These calculations assume a constant population size over this period.