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The Role of Cognitive Skills in Economic Development

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Author Info
Eric A. Hanushek
Ludger Woessmann

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Abstract

The role of improved schooling, a central part of most development strategies, has become controversial because expansion of school attainment has not guaranteed improved economic conditions. This paper reviews the role of cognitive skills in promoting economic well-being, with a particular focus on the role of school quality and quantity. It concludes that there is strong evidence that the cognitive skills of the population—rather than mere school attainment—are powerfully related to individual earnings, to the distribution of income, and to economic growth. New empirical results show the importance of both minimal and high level skills, the complementarity of skills and the quality of economic institutions, and the robustness of the relationship between skills and growth. International comparisons incorporating expanded data on cognitive skills reveal much larger skill deficits in developing countries than generally derived from just school enrollment and attainment. The magnitude of change needed makes clear that closing the economic gap with developed countries will require major structural changes in schooling institutions.

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Publisher Info
Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 46 (2008)
Issue (Month): 3 (September)
Pages: 607-68
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Handle: RePEc:aea:jeclit:v:46:y:2008:i:3:p:607-68

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  1. Eric A. Hanushek & Ludger Woessmann, 2009. "Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation," NBER Working Papers 14633, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Aitor Lacuesta & Sergio Puente & Pilar Cuadrado, 2009. "Omitted variables in the measure of a labour quality index: the case of Spain," Banco de España Working Papers 0835, Banco de España. [Downloadable!]
  3. Oliver Falck & Michael Fritsch & Stephan Heblich, 2009. "Bohemians, Human Capital, and Regional Economic Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  4. Eric A. Hanushek & Steven G. Rivkin, 2008. "Harming the Best: How Schools Affect the Black-White Achievement Gap," NBER Working Papers 14211, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Amavilah, Voxi Heinrich, 2008. "Domestic resources, governance, global links, and the economic performance of Sub-Saharan Africa," MPRA Paper 11193, University Library of Munich, Germany. [Downloadable!]
  6. Jere R. Behrman & John Hoddinott & John A. Maluccio & Reynaldo Martorell, 2009. "Brains versus Brawn: Labor Market Returns to Intellectual and Health Human Capital in a Poor Developing Country," Middlebury College Working Paper Series 0907, Middlebury College, Department of Economics. [Downloadable!]
  7. Jim Cobbe, 2007. "Education, Education Financing, and the Economy in Viet Nam," Working Papers wp2007_11_01, Department of Economics, Florida State University, revised Jul 2009. [Downloadable!]
  8. Clemens, Michael A. & Montenegro, Claudio E. & Pritchett, Lant, 2008. "The place premium : wage differences for identical workers across the US border," Policy Research Working Paper Series 4671, The World Bank. [Downloadable!]
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  9. Silke Anger & Guido Heineck, 2009. "Do Smart Parents Raise Smart Children?: The Intergenerational Transmission of Cognitive Abilities," SOEPpapers 156, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
  10. Eric A. Hanushek & Ludger Woessmann, 2009. "Schooling, Cognitive Skills, and the Latin American Growth Puzzle," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  11. Serge Coulombe & Jean-Francois Tremblay, 2009. "Education, Productivity and Economic Growth: A Selective Review of the Evidence," International Productivity Monitor, Centre for the Study of Living Standards, vol. 18, pages 3-24, Spring. [Downloadable!]
  12. Hendricks, Lutz & Schoellman, Todd, 2009. "Student Abilities During the Expansion of U.S. Education, 1950-2000," MPRA Paper 12798, University Library of Munich, Germany. [Downloadable!]
  13. Lopez, Ramon, 2009. "Natural disasters and the dynamics of intangible assets," Policy Research Working Paper Series 4874, The World Bank. [Downloadable!]
  14. Lopez, Ramon & Stocking, Andrew, 2009. "Bringing Growth Theory "Down to Earth"," Working Papers 48944, University of Maryland, Department of Agricultural and Resource Economics. [Downloadable!]
  15. Marcelo Soto, 2009. "The causal effect of education on aggregate income," UFAE and IAE Working Papers 779.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
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