The name is absent

share of adult population with at least some secondary education (EDU). Since we measure
GDP in per capita terms, we also employ population size (POP). Country-specific fixed
effects φ_i account for time-invariant differences between countries such as culture for
learning, risk aversion, but also school system characteristics, while time fixed effects φ_t
account for the fact that the independent variables have positive trends.¹¹

Figure 2. Country specific development in relative student achievement.

year

Jap —■— Tha

Kor ---1--- HongK

Aus —■— Nzl
Isr

year

¹¹ See Wossmann, 2003b, for an analysis of educational institutions and student performance. Notice that
including time-specific effects may influence the interpretation of the results, as we discuss later. The scaling of
the test scores makes the scores comparable over time so that, by including time fixed effects, the model in
essence draws inference on which other countries that participated on the different test and year. Thus, we also
report results where the time-specific effects are replaced by a simple trend.

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