Education Quality and Economic Development

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1 Education Quality and Economic Development Eric A. Hanushek Stanford University Bank of Israel Jerusalem, June 2017

2 Sustainable Development Goals (SDGs)

3 Development = Growth

4 Growth = Skills

5 Conclusions 1. Development = growth - Recent focus on fiscal issues cannot neglect future Growth = skills 2. Value of school improvement is enormous 3. Improvement is possible, in part as seen by recent advances in Israel 4. Improvement requires continued commitment

6 Years of Schooling and Economic Growth,

7 Expanding Access and School Completion Considerable policy focused on school completion 1. This is not Israel s biggest problem 2. It reflects why previous figure is wrong

8 Knowledge Capital and Economic Growth,

9 Years of Schooling and Economic Growth With test-score control Without test-score control

10 Too much attendance without learning

11 Trends in Test Scores 560 Japan Japan Korea Korea N. Zealand Norway Australia Netherlands UK Finland France Belgium Canada Sweden Germany USA Italy Finland Netherlands N. Zealand Canada Australia UK Sweden France Belgium Norway USA Germany Italy

12 Hanushek/Woessmann, Journal of Economic Growth, 2012 Trends in Growth Rates vs. Trends in Test Scores

13 Example of Value of Improvement - 1 Assuming historical patterns hold Present value over 80 years Improvement plan Universal basic skills 15 years (by 2030) Israel moves to universal basic skills

14 Hong Kong-China Estonia Korea Singapore Japan Finland Viet Nam Chinese Taipei Poland Canada Switzerland Netherlands Ireland Germany Latvia Slovenia Australia Denmark Austria Czech Republic United Kingdom Belgium New Zealand Spain France Norway Lithuania Russian Federation Italy Portugal United States Iceland Hungary Luxembourg Croatia Sweden Ukraine Slovak Republic Greece Israel Turkey Students Lacking Basic Skills 40% 33% 30% 20% 10% 0%

15 Example of Value of Improvement - 1 Assuming historical patterns hold Present value over 80 years Improvement plan Universal basic skills 15 years (by 2030) Israel moves to universal basic skills Present value of 353% of GDP [USD 991 billion] Average 7.6% higher GDP/pop 15% higher paychecks for all workers every year

16 PISA Math+Science Performance (2012)

17 Value of Improvement - 2 Assuming historical patterns hold Present value over 80 years Improvement plan 25 points on PISA 15 years (by 2030) Israel moves to Norway level

18 PISA Math+Science Performance (2012) points

19 Example of Value of Improvement - 2 Assuming historical patterns hold Present value over 80 years Improvement plan 25 points on PISA 15 years (by 2030) Israel moves to Norway level Present value of 322% of GDP [USD 905 billion] Average 6.9% higher GDP/pop 14% higher paychecks for all workers every year

20 Latvia Chile Brazil Portugal Hong Kong Germany Poland Liechtenstein Slovenia Colombia Lithuania United Kingdom Singapore Switzerland Greece Mexico Israel Finland Italy New Zealand Denmark Korea, Rep. Hungary Iran United States Taiwan (Chinese Taipei) Belgium Canada Cyprus Australia Jordan Russian Fed. Indonesia Austria Spain Iceland Japan Netherlands Tunisia Argentina France Ireland Norway Romania Czech Rep. Slovak Rep. Thailand Bulgaria Sweden Estimated annual test-score gains Achievement Growth, % 4% 3% >25 point increase by % 1% 0% -1% -2% -3%

21 Returns to Skills PIACC Round 2

22 Returns to Skills across PIAAC Countries

23 Are there things to be done?

24 Resource Policies Little evidence of success Cross country evidence Within country developed Within country developing

25 Changes in educational spending and in student achievement across countries Scatter plot of the change in expenditure per student, (constant prices, 2000 = 100) against change in PISA reading score, r=0.22 but = without Poland.

26 Resource Policies Little evidence of success Cross country evidence Within country developed Within country developing Consistent with detailed analysis class size school characteristics

27 Resource Policies Does not say resources never have effect Does not say resources cannot have effect No expectation within current incentive structure

28 Teacher Quality Teachers most important input No identifiable characteristics Master s degrees Experience* Certification Preparation Professional development Observable through both student performance and supervisor ratings Cannot regulate and pay on characteristics

29 Centralized exams Accountability Institutional Reforms Supported by Evidence Autonomy/decentralization Choice Direct performance incentives

30 s.d. performance gain Alternative Estimates of Least Effective Teachers (United States distribution) Croatia/Russia % 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

31 s.d. performance gain Alternative Estimates of Least Effective Teachers (United States distribution) Norway % 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

32 s.d. performance gain Alternative Estimates of Least Effective Teachers (United States distribution) Norway % 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

33 s.d. performance gain Alternative Estimates of Least Effective Teachers (United States distribution) Australia 0.25 Norway % 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

34 Preschool Promise and Issues Evidence of success Strongest with demonstration programs Varied across operational programs Key uncertainties Relevant population Dimensions of program

35 PISA Points PISA Points with Varying Programs % benefiting 0 40% 0% 30% 50% Fade Out of Effects 70% 20%

36 Conclusions 1. Development = growth - Recent focus on fiscal issues cannot neglect future Growth = skills 2. Value of school improvement is enormous 3. Improvement is possible, in part as seen by recent advances in Israel 4. Improvement requires continued commitment

37 Sources

SKILLS, MOBILITY, AND GROWTH

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