How much do Educational Outcomes Matter in OECD Countries?

Table 7: Baseline projections of the economic value of three education reform scenarios

Scenario I: Increase avg.                                Scenario II:                                                            Scenario III:

performance by ¼ std. dev.      Bring each country to Finish level of 546 points on PISA__Bring all to minimum of 400 points on PISA_____________

,_r , _{c r}∙ z,∙,,∙        Valueofreform in%of L.-r.growth Note: Increase Valueofreform in%of L.-r.growth Note: Share of students

Value ofreform (billion S)                _β,.            ,_r,_nτ, .      ° ,    ,   . _r,_τc.                        _β,.            ,_r,_nτ, .      ° ,    ,  , ₁                 ....

(billion S) CurrentGDP increase (p.p.) m PISA score      (billion S) CurrentGDP increase (p.p.) below minimum skills

______________________________Ш____________________(2]____________(3)___________(4)_____________(5]______________(6)____________Q___________(8)________________(9)
AustraHa                  2,631                2,092        229%        0.38          20.1           2,430        266%        0.43             9.8%

Austria                      969                  1,545         460%         0.72           38.4            1,308         390%         0.62              13.9%

Belgium                  1,208                1,586        379%        0.60          32.2           1,816        434%        0.68             15.3%

Canada                   4,051                2,728        194%        0.32          17.2           3,075        219%        0.36             8.1%

CzechRepubhc             830                 1,177        409%        0.64          34.5           1,054        366%        0.58             13.1%

Denmark                  608                 1,231        584%        0.88          47.5            908         430%        0.67            15.2%

Finland                    594                  0           0%         0.00           0.0            255         124%        0.21             4.7%

France                    6,557               11,349        499%        0.77          41.3           9,844        433%        0.68             15.3%

Germany                  8,822               17,245        564%        0.86          46.0           15,166        496%        0.77            17.3%

Greece                    1,047               4,253        1172%        1.59          85.2           2,943        811%        1.17            26.5%

Hungary                   603                 1,323        633%        0.95          51.0            972         465%        0.72            16.3%

Iceland                    36                  66         530%        0.81          43.6            46         371%        0.59             13.3%

Ireland                    585                 995         490%        0.76          40.6            664         327%        0.52            11.8%

Italy                        5,526                 19,353        1010%         1.41           75.6            13,503        705%         1.04              23.5%

Japan                    13,280               2,871         62%         0.11           5.7           10,382        226%        0.37             8.3%

Korea, Rep.               4,120                 756         53%         0.09           4.8            2,544        178%        0.30             6.7%

Luxembourg                126                 421         963%        1.36          72.7            289         662%        0.99            22.3%

Mexico                   4,753               39,363       2389%        2.68          143.9          29,557       1794%        2.19            49.5%

Netherlands                 2,032                 1,344         191%         0.31           16.9            1,779         253%         0.41              9.3%

NewZealand               361                 275         220%        0.36          19.4            385         308%        0.49             11.2%

Norway                    844                 1,975        675%        1.00          53.9           1,391        476%        0.74             16.6%

Poland                    2,119                5,320        724%        1.07          57.2           3,766        513%        0.79             17.8%

Portugal                     742                  2,860         1112%         1.52           81.7            1,878         730%         1.07              24.2%

SlovakRepubhc            343                 787         661%        0.99          52.9            549         461%        0.72            16.2%

Spain                    4,496               12,332        791%        1.15          61.7           8,237        529%        0.81             18.3%

Sweden                   1,080                1,761        470%        0.73          39.2           1,406        375%        0.59             13.4%

Switzerland                 1,003                 1,159         333%         0.53           28.6            1,263         363%         0.58              13.0%

Turkey                     3,043                 19,450        1844%         2.24           120.1           15,089        1430%         1.85              41.8%

UnitedKingdom           6,862                7,892        332%        0.53          28.5           7,669        322%        0.52            11.7%

United States_______________43,835________________111,923________737%_________1,08___________58.1____________86,167_________567%_________0,86______________19.4%________

OECD___________________123,108______________275,429_______645%________0,93__________49.8__________226,333_______530%________0,80_____________18.0%_______

Notes Discounted value of future increases in GDP until 2090, expressed in billion $ (PPP) and as percentage of current GDP “Long-run growth increase” refers to increase in annual growth rate (in percentage points) once the whole labor force has
reached higher level of educational performance “Increase in PISA score” refers to the ultimate increase in educational performance due to reform scenario II “Share of students below minimum skills” refers to the share of students in each country
ρerformιngbelow the minimum skill level of 400 PISA points See text for reform parameters Source Authors’ calculations

Table 8: Projection results with “neoclassical” model specification

Scenario I:                          Scenario II:                         Scenario III:                         „      . ɪɪ                          „      . ɪɪ

_{τ                    j},                   ŋ .        ,        ɪ ɪ τ-∙ ∙ 1            τx ∙     „ ɪ ∙ ∙                             Scenano II,                             Scenano II,

Increase avg. Pertomiance     Bnng each country to Finish       BnngaUtomimmum           _m. ,                       _m∙ ,      _λ,,_λ

, ,_zΛ ,              ₁ T _cεt,- ■ ; _t,_toλ         ..77   ∙ . τ>τc. л            Time horizon 2050             Time hoπzon 2150

by ¼ std. dev.           level of 546 points on PISA        of 400 pomts on PISA

BUhonS     % GDP      BiUionS     % GDP      BiUionS     % GDP      BUhonS     % GDP      BiUionS     % GDP

________________________________(ɪ)             (2)_______________(3)             (4)_______________(5)             (6)_______________P)             (8)_______________(9)            (ɪθ)
AustraHa                 2,073        227%          1,656        182%          3,826        419%           276         30%          3,696        405%

Austria                   712         212%          1,120        334%          1,471        438%           186         55%          2,511        748%

Belgium                926        221%         1,207       288%         2,334       557%          200        48%         2,711       647%

Canada                  3,282        234%          2,227        159%          5,209        371%           368         26%          4,984        355%

CzechRepubhc           781        271%         1,095       381%         1,631       567%          169        59%         2,570       893%

Denmark                435        206%          859        407%          869        412%          143        68%          1,932       916%

Finland                 560        272%           0          0%           651        316%           0          0%            0          0%

France                   5,026        221%          8,552        376%         11,090       488%          1,397        61%          19,389       853%

Germany                 6,521        213%         12,466       408%         15,347       502%          2,049         67%          28,191        922%

Greece                   671         185%          2,548        702%          1,459        402%           417         115%          5,837        1609%

Hungary                  618         296%          1,322        632%          1,302        623%           193         93%          3,213        1538%

Iceland                  25        204%          46        367%          46        371%           8         61%          102        819%

Heland                  386        190%          645        318%          643        317%          111         55%          1,417       698%

Italy                     3,725        194%         12,330       644%          8,102        423%          2,011        105%         28,244       1474%

Japan                   12,584       273%          2,772        60%          24,595       534%           442         10%          6,329        137%

Korea, Rep.               4,489        314%           839         59%          7,094        497%           128          9%           1,969        138%

Luxembourg              46         105%          144        330%          93        214%          29         66%          291        665%

Mexico                  3,451        209%         24,773       1504%         7,160        435%          3,583        217%         62,461       3791%

Netherlands               1,623        230%          1,082        154%          2,979        423%           180         26%          2,413        342%

NewZealand             360        288%          276        221%          790        632%          42         34%          646        516%

Norway                 435        149%          985        337%          855        292%          181         62%         2,088       714%

Poland                   2,192        298%          5,322        725%          4,651        633%           770         105%         13,051       1777%

Portugal                  579         225%          2,099        816%          1,209        470%           323         126%          4,989        1940%

SlovakRepubhc          337        283%          749        630%          682        573%          111         93%          1,809       1519%

Spain                    3,142        202%          8,281        531%          6,275        403%          1,359         87%          18,825       1208%

Sweden                 784        209%         1,259       336%         1,542       412%          210        56%         2,818       753%

Switzerland               722         208%           831         239%          1,598        460%           141         41%           1,837        528%

Turkey                  2,699        256%         15,474       1467%         6,363        603%          2,162        205%         39,523       3747%

UnitedKingdom          5,504        231%          6,308        265%         10,918       459%          1,032        43%          14,243       599%

United States_____________25,344________167%_________62,386________411%_________56,407________371%__________10,962________72%__________135,962_______895%

OECD_________________90,031_______211%________179,655______421%________187,191______439%_________29,183_______68%_________414,050_______970%

Notes'. Discomted value of future increases in GDP until 2090, expressed in bUhon S (PPP) and as percentage of current GDP. See text for reform parameters. Source: Authors’
calculations.