Explaining Educational Attainment across Countries and over Time

Consider the following facts. In 1950 the richest ten-percent of countries attained an average of 8 years of schooling whereas the poorest ten-percent of countries attained 1.3 years, a 6-fold difference. By 2005, the difference in schooling declined to 2-fold. The fact is that schooling has increased faster in poor than in rich countries. What explains educational attainment differences across countries and their evolution over time? We develop an otherwise standard model of human capital accumulation with two important features: non-homothetic preferences and an operating labor supply margin. We use the model to assess the quantitative contribution of productivity and life expectancy differences across countries in explaining educational attainment. Calibrating the parameters of the model to reproduce the historical time-series data for the United States, we find that the model accounts for 90 percent of the difference in schooling levels between rich and poor countries in 1950 and 64 percent of the increase in schooling over time in poor countries. The model generates a faster increase in schooling in poor than in rich countries consistent with the data. These results highlight the importance of productivity and development in education, emphasizing the crucial role of productivity improvements in poor countries relative to often-discussed educational policies.