EDUCATIONAL OUTCOMES IN OECD COUNTRIES
27
The rankings of countries according to increases compared to current GDP are shown
in Figure 5. One interpretation of this figure is the amount of economic leverage from
educational improvements that is possible for different OECD countries.
5.2.3. Scenario III: Bring everyone up to minimum skill level of 400 PISA points
The final scenario considered is a “compensatory” improvement in education where all
students are brought up to a minimal skill level - which is defined here as obtaining a
score of 400 on the PISA tests, or one standard deviation below the OECD average.
While the previous simulations could be thought of as displaying the results of shifting
the entire achievement distribution, this scenario considers the implications of bringing
up the bottom of the distribution.
In order to understand the implications of changing just one portion of the achievement
distribution, we employ the alternative estimation of the underlying economic growth
models of column (2) of Table 5. Specifically, instead of relying on just average
cognitive skills in the growth models, the proportion of the population with scores less
than 400 and the proportion with scores over 600 are included in the growth models.
For these calculations, all OECD countries including Finland have room for
improvement. On average, 18 percent of students in the OECD countries score below
400. As might be expected from the average scores, the required improvements are
largest in Mexico and Turkey (see column (9) of Table 7).
Columns (6)-(8) of Table 7 display the economic outcomes according to historical
growth patterns of bringing all OECD students up to minimum competence levels. The
overall OECD change would be an average annual growth rate that was 0.8 percent
higher after reform was accomplished and after the full labor force had received the
improved education. The total improvements for the OECD countries from achieving
universal minimum proficiency would have a present value of $226 trillion. Again,
there is a wide range of outcomes including relatively small improvements of 219
percent of current GDP for Canada as compared to nine OECD countries that would
experience a benefit more than five times their current GDP.
The range of outcomes is depicted in Figure 6 that ranks countries by the benefits
compared to current GDP. Even Finland could by these calculations over double its
current GDP through bringing the relatively modest proportion of low performers (4.7
percent) up to scores of 400. Note also that the effects of these policies on the separate
countries differ from the previous scenario, reflecting the differences in the underlying
distribution of student performance.
5.3. An alternative neoclassical growth framework
The projections so far assume that higher educational achievement allows a country to
keep on growing at a higher rate in the long run. Such a specification captures the basic
ideas of endogenous growth theory, where a better-educated workforce leads to a larger
stream of new ideas that produces technological progress at a higher rate (see Box 1