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The Role of School Improvement in Economic Development


  • Eric A. Hanushek
  • Ludger Woessmann


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 education in promoting economic well-being, with a particular focus on the role of educational quality. 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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  • Eric A. Hanushek & Ludger Woessmann, 2007. "The Role of School Improvement in Economic Development," NBER Working Papers 12832, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12832

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    References listed on IDEAS

    1. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, vol. 91(4), pages 795-813, September.
    2. Dee, Thomas S., 2004. "Are there civic returns to education?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1697-1720, August.
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    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • I2 - Health, Education, and Welfare - - Education
    • J0 - Labor and Demographic Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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