Abstract
Economic theory suggests that the skills of a society’s population are important determinants of economic growth. ILSAs have been used to put these theories to an empirical test. This chapter provides an overview of models of the role of educational achievement in macroeconomic outcomes and summarizes empirical economic work using ILSAs to measure relevant skills. In economic terms, the aggregate cognitive skills of the population as measured by ILSAs can be interpreted as the knowledge capital of nations. The chapter concludes that there is strong evidence that the cognitive skills of the population – rather than mere school attainment – are powerfully related to long-run economic growth. The relationship between knowledge capital and growth proves extremely robust in empirical applications. Growth simulations reveal that the long-run rewards to educational quality are large but also require patience.
Similar content being viewed by others
References
Acemoglu, D. (2009). Introduction to modern economic growth. Princeton.
Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. In P. Aghion & S. N. Durlauf (Eds.), Handbook of economic growth (pp. 385–472). North Holland.
Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. Crown Publishers.
Aghion, P., & Howitt, P. (1998). Endogenous growth theory. MIT Press.
Aghion, P., & Howitt, P. (2009). The economics of growth. MIT Press.
Almlund, M., Duckworth, A. L., Heckman, J., & Kautz, T. (2011). Personality psychology and economics. In E. A. Hanushek, S. Machin, & L. Woessmann (Eds.), Handbook of the economics of education, Vol. 4 (pp. 1–181). North Holland.
Barro, R. J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(2), 407–443.
Barro, R. J. (1997). Determinants of economic growth: A cross-country empirical study. MIT Press.
Barro, R. J., & Lee, J.-W. (1993). International comparisons of educational attainment. Journal of Monetary Economics, 32(3), 363–394.
Barro, R. J., & Lee, J.-W. (2001). International data on educational attainment: Updates and implications. Oxford Economic Papers, 53(3), 541–563.
Barro, R. J., & Lee, J.-W. (2013). A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics, 104, 184–198.
Barro, R. J., & Sala-i-Martin, X. (2004). Economic growth (2nd ed.). The MIT Press.
Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. National Bureau of Economic Research.
Benhabib, J., & Spiegel, M. M. (1994). The role of human capital in economic development: Evidence from aggregate cross-country data. Journal of Monetary Economics, 34(2), 143–174.
Benhabib, J., & Spiegel, M. M. (2005). Human capital and technology diffusion. In P. Aghion & S. N. Durlauf (Eds.), Handbook of economic growth (pp. 935–966). North Holland.
Bils, M., & Klenow, P. J. (2000). Does schooling cause growth? American Economic Review, 90(5), 1160–1183.
Borghans, L., Duckworth, A. L., Heckman, J. J., & ter Weel, B. (2008). The economics and psychology of personality traits. Journal of Human Resources, 43(4), 972–1059.
Bowles, S., Gintis, H., & Osborne, M. (2001). The determinants of earnings: A behavioral approach. Journal of Economic Literature, 39(4), 1137–1176.
Brown, G., Micklewright, J., Schnepf, S. V., & Waldmann, R. (2007). International surveys of educational achievement: How robust are the findings? Journal of the Royal Statistical Society A, 170(3), 623–646.
Cunha, F., & Heckman, J. J. (2007). The technology of skill formation. American Economic Review, 97(2), 31–47.
Cunha, F., Heckman, J. J., Lochner, L., & Masterov, D. V. (2006). Interpreting the evidence on life cycle skill formation. In E. A. Hanushek & F. Welch (Eds.), Handbook of the economics of education (pp. 697–812). Elsevier.
Ehrlich, Isaac. (2007, January). The mystery of human capital as engine of growth, or why the US became the economic superpower in the 20th century (NBER working paper 12868). National Bureau of economic research.
Hanushek, E. A. (2002). Publicly provided education. In A. J. Auerbach & M. Feldstein (Eds.), Handbook of Public Economics, Vol. 4 (pp. 2045–2141). North Holland.
Hanushek, E. A. (2016). Will more higher education improve economic growth? Oxford Review of Economic Policy, 32(4), 538–552.
Hanushek, E. A., & Kimko, D. D. (2000). Schooling, labor force quality, and the growth of nations. American Economic Review, 90(5), 1184–1208.
Hanushek, E. A., & Woessmann, L. (2008). The role of cognitive skills in economic development. Journal of Economic Literature, 46(3), 607–668.
Hanushek, E. A., & Woessmann, L. (2011). The economics of international differences in educational achievement. In E. A. Hanushek, S. Machin, & L. Woessmann (Eds.), Handbook of the economics of education, Vol. 3 (pp. 89–200). North Holland.
Hanushek, E. A., & Woessmann, L. (2012). Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation. Journal of Economic Growth, 17(4), 267–321.
Hanushek, E. A., & Woessmann, L. (2015a). The knowledge capital of nations: Education and the economics of growth. MIT Press.
Hanushek, E. A., & Woessmann, L. (2015b). Universal basic skills: What countries stand to gain. Organisation for Economic Co-operation and Development.
Hanushek, E. A., & Woessmann, L. (2020). Education, knowledge capital, and economic growth. In S. Bradley & C. Green (Eds.), He economics of education: A comprehensive overview (pp. 171–182). Academic Press.
Hanushek, E. A., & Zhang, L. (2009). Quality-consistent estimates of international schooling and skill gradients. Journal of Human Capital, 3(2), 107–143.
Heckman, J. J., Stixrud, J., & Urzua, S. (2006). The effects of cognitive and noncognitive abilities on labor market outcomes and social behavior. Journal of Labor Economics, 24(3), 411–482.
International Monetary Fund. (2014). World economic outlook, October 2014. International Monetary Fund.
Jones, C. I., & Vollrath, D. (2013). Introduction to economic growth (3rd ed.). W.W. Norton and Company.
Levine, R., & Renelt, D. (1992). A sensitivity analysis of cross-country growth regressions. American Economic Review, 82(4), 942–963.
Levine, R., & Zervos, S. J. (1993). What we have learned about policy and growth from cross-country regressions. American Economic Review, 83(2), 426–430.
Lindqvist, E., & Vestman, R. (2011). The labor market returns to cognitive and noncognitive ability: Evidence from the Swedish enlistment. American Economic Journal: Applied Economics, 3(1), 101–128.
Lucas, R. E., Jr. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42.
Mankiw, N. G., Romer, D., & Weil, D. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2), 407–437.
Mincer, J. (1974). Schooling, experience, and earnings. NBER.
Nelson, R. R., & Phelps, E. (1966). Investment in humans, technology diffusion and economic growth. American Economic Review, 56(2), 69–75.
OECD. (2013). PISA 2012 results: What students know and can do – Student performance in mathematics, reading and science (volume I). Organisation for Economic Co-operation and Development.
Organisation for Economic Co-operation and Development. (2013). PISA 2012 results: What students know and can do – Student performance in mathematics, reading and science (volume I). OECD.
Pritchett, L. (2001). Where has all the education gone? World Bank Economic Review, 15(3), 367–391.
Pritchett, L. (2006). Does learning to add up add up? The returns to schooling in aggregate data. In E. A. Hanushek & F. Welch (Eds.), Handbook of the economics of education (pp. 635–695). North Holland.
Romer, P. (1990). Endogenous technological change. Journal of Political Economy, 99(5,pt. II), S71–S102.
Sala-i-Martin, X., Doppelhofer, G., & Miller, R. I. (2004). Determinants of long-term growth: A Bayesian averaging of classical estimates (BACE) approach. American Economic Review, 94(4), 813–835.
Schultz, T. W. (1961). Investment in human capital. American Economic Review, 51(1), 1–17.
Schumpeter, Joseph A. 1912[2006]. Theorie der wirtschaftlichen Entwicklung. Duncker & Humblot (English translation: The Theory of Economic Development).
Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70(1), 65–94.
Welch, F. (1970). Education in production. Journal of Political Economy, 78(1), 35–59.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Section Editor information
Rights and permissions
Copyright information
© 2021 Springer Nature Switzerland AG
About this entry
Cite this entry
Hanushek, E.A., Woessmann, L. (2021). The Political Economy of ILSAs in Education: The Role of Knowledge Capital in Economic Growth. In: Nilsen, T., Stancel-Piątak, A., Gustafsson, JE. (eds) International Handbook of Comparative Large-Scale Studies in Education. Springer International Handbooks of Education. Springer, Cham. https://doi.org/10.1007/978-3-030-38298-8_4-1
Download citation
DOI: https://doi.org/10.1007/978-3-030-38298-8_4-1
Received:
Accepted:
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-38298-8
Online ISBN: 978-3-030-38298-8
eBook Packages: Springer Reference EducationReference Module Humanities and Social SciencesReference Module Education