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.

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