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The Effect of Raising School Quality on Earnings

Author

Listed:
  • Patrinos, Harry Anthony

    (University of Arkansas, Fayetteville)

  • Psacharopoulos, George

    (Georgetown University)

Abstract

The evidence underscores the need to shift attention from school attainment to actual learning. While the average global return to an additional year of schooling is about 10 percent, a one standard deviation increase in test scores raises earnings by 15 percent. Studies show that including direct measures of skills reduces the estimated return to schooling, revealing the stronger role of quality. These findings suggest that education policy should prioritize learning outcomes, not just years in school, to more accurately reflect the economic value of education.

Suggested Citation

  • Patrinos, Harry Anthony & Psacharopoulos, George, 2025. "The Effect of Raising School Quality on Earnings," IZA Discussion Papers 17939, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17939
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    Keywords

    cognitive skills; returns to education; earnings;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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