EDUCATIONAL OUTCOMES IN OECD COUNTRIES
How much do educational
outcomes matter in OECD
countries?*
Eric A. Hanushek and Ludger Woessmann
Hoover Institution, Stanford University, NBER and CESifo; University of Munich, Ifo Institute
for Economic Research, CESifo and IZA
1. INTRODUCTION
Despite its surge over the past two decades, research in the economics of growth -
both theoretical and empirical - has produced surprisingly few resilient results about
policies that might promote long-run growth in developed countries (cf. Aghion and
Howitt (2006)). Most of the robust results that exist refer either to the importance of
basic economic institutions, with important policy implications for developing countries,
or to policies that affect short- to medium-term growth in developed countries. Here we
present evidence that improved human capital, measured by cognitive skills, has the
potential for substantial improvements in the long-run economic well-being of OECD
countries.
The immense variation in the long-run growth experiences of developed countries has
largely escaped notice. For example, from 1960 to 2000, GDP per capita grew by less
than 1.5 percent on average per year in New Zealand and Switzerland, but by more than
4 percent per year in Ireland, Japan, and South Korea. As a consequence, the average
Korean was about 10 times as well off in 2000 as in 1960, and the average Irish and
Japanese about 5 times. By contrast, the average New Zealander and Swiss was only
* Paper presented at the 52nd Panel Meeting of Economic Policy in Rome. We thank the editor and four anonymous referees
for their comments. Woessmann gratefully acknowledges the support and hospitality provided by the W. Glenn Campbell and
Rita Ricardo-Campbell National Fellowship of the Hoover Institution, Stanford University, as well as support by the Pact for
Research and Innovation of the Leibniz Association.