NCPA - National Center for Policy Analysis


March 31, 2008

The level of cognitive skills of a nation's students has a large effect on its subsequent economic growth rate, say researchers Eric A. Hanushek, Dean T. Jamison, Eliot Jamison, and Ludger Woessmann.

For example:

  • Across 50 countries, each additional year of average schooling in a country increased the average 40 year growth rate in gross domestic product (GDP) by about .37 percent.
  • This lift is a boost to annual growth rates of more than 10 percent of what would otherwise have occurred, a significant amount.

The researchers point out that the level of cognitive skills in the United States is only about average among developed countries, yet the country's GDP growth rate has been higher than average over the past century.  The United States may be resting on its historic record as the world's leader in educational attainment.  In addition, the United States has other advantages, some of which are entirely separate and apart from the quality of its schooling:

  • The United States maintains generally freer labor and product markets than most countries in the world.
  • There is less government regulation of firms, and trade unions are less powerful than in many other countries.
  • The United States has generally less intrusion of government in the operation of the economy, including lower tax rates and minimal government production through nationalized industries.
  • Taken together, these characteristics of the U.S. economy encourage investment, permit the rapid development of new products and activities by firms, and allow U.S. workers to adjust to new opportunities.

Source: Eric A. Hanushek, Dean T. Jamison, Eliot Jamison, and Ludger Woessmann, "Education and Economic Growth," Education Next, Spring 2008.

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