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A New Macroeconomic Measure of Human Capital Exploiting PISA and PIAAC: Linking Education Policies to Productivity

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  • Balazs Egert
  • Christine de la Maisonneuve
  • David Turner

Abstract

This paper provides a new measure of human capital using PISA and PIAAC surveys, and mean years of schooling. The new measure is a cohort-weighted average of past PISA scores (representing the quality of education) of the working age population and the corresponding mean years of schooling (representing the quantity of education). In contrast to the existing literature, the relative weights of each component are not imposed or calibrated but directly estimated. The paper finds that the elasticity of the stock of human capital with respect to the quality of education is three to four times larger than for the quantity of education. The new measure has a strong link to productivity with the potential for productivity gains being much greater from improvements in the quality than quantity component of human capital. The magnitude of these potential gains in MFP is considerable but the effects materialise with long lags. The paper simulates the impact of a particular reform to education policy (pre-primary education) on human capital and productivity to demonstrate the usefulness of the new measure for policy analysis.

Suggested Citation

  • Balazs Egert & Christine de la Maisonneuve & David Turner, 2022. "A New Macroeconomic Measure of Human Capital Exploiting PISA and PIAAC: Linking Education Policies to Productivity," CESifo Working Paper Series 9728, CESifo.
    • Handle: RePEc:ces:ceswps:_9728
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    Cited by:

    1. Balázs Égert & Christine de la Maisonneuve & Balazs Egert, 2023. "The Impact of the War on Human Capital and Productivity in Ukraine," CESifo Working Paper Series 10513, CESifo.
    2. Christine de la Maisonneuve & Balazs Egert & David Turner, 2023. "Quantifying the Macroeconomic Impact of Covid-19-Related School Closures through the Human Capital Channel," CESifo Working Paper Series 10396, CESifo.
    3. Jarmila Botev & Balazs Egert & David Turner, 2022. "The Effect of Structural Reforms: Do They Differ between GDP and Adjusted Household Disposable Income?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(12), pages 1-55, December.
    4. Raphaël Martin & Thomas Renault & Baptiste Roux, 2022. "Baisse de la productivité en France : échec en « maths » ?," Post-Print hal-04084079, HAL.

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    More about this item

    Keywords

    human capital; PISA; PIAAC; mean years of schooling; education policies; productivity; OECD countries;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I20 - Health, Education, and Welfare - - Education - - - General
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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