Education Quality and Economic Development

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

Sustainable Development Goals (SDGs)

Development = Growth

Growth = Skills

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

Years of Schooling and Economic Growth, 1960-2000

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

Knowledge Capital and Economic Growth, 1960-2000

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

Too much attendance without learning

Trends in Test Scores 560 Japan Japan Korea 540 520 500 480 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 460 1975 2000

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

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

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%

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

PISA Math+Science Performance (2012) 600 550 500 450 400 350

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

PISA Math+Science Performance (2012) 600 550 500 25 points 450 400 350

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

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, 1995-2009 5% 4% 3% >25 point increase by 2030 2% 1% 0% -1% -2% -3%

Returns to Skills PIACC Round 2

Returns to Skills across PIAAC Countries

Are there things to be done?

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

Changes in educational spending and in student achievement across countries Scatter plot of the change in expenditure per student, 2000-2010 (constant prices, 2000 = 100) against change in PISA reading score, 2000-2012. r=0.22 but =-0.008 without Poland.

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

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

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

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

s.d. performance gain Alternative Estimates of Least Effective Teachers (United States distribution) 1.00 0.75 0.50 0.25 Croatia/Russia 0.00 0% 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

s.d. performance gain Alternative Estimates of Least Effective Teachers (United States distribution) 1.00 0.75 0.50 0.25 Norway 0.00 0% 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

s.d. performance gain Alternative Estimates of Least Effective Teachers (United States distribution) 1.00 0.75 0.50 Australia 0.25 Norway 0.00 0% 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

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

PISA Points PISA Points with Varying Programs 17 20 15 10 5 2 60% benefiting 0 40% 0% 30% 50% Fade Out of Effects 70% 20%

Sources