Skip to main content
SpringerLink
Log in

The Political Economy of ILSAs in Education: The Role of Knowledge Capital in Economic Growth

  • Living reference work entry
  • First Online:
International Handbook of Comparative Large-Scale Studies in Education

Part of the book series: Springer International Handbooks of Education ((SIHE))

  • 64 Accesses

Abstract

Economic theory suggests that the skills of a society’s population are important determinants of economic growth. ILSAs have been used to put these theories to an empirical test. This chapter provides an overview of models of the role of educational achievement in macroeconomic outcomes and summarizes empirical economic work using ILSAs to measure relevant skills. In economic terms, the aggregate cognitive skills of the population as measured by ILSAs can be interpreted as the knowledge capital of nations. The chapter concludes that there is strong evidence that the cognitive skills of the population – rather than mere school attainment – are powerfully related to long-run economic growth. The relationship between knowledge capital and growth proves extremely robust in empirical applications. Growth simulations reveal that the long-run rewards to educational quality are large but also require patience.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

References

  • Acemoglu, D. (2009). Introduction to modern economic growth. Princeton.

    Google Scholar 

  • Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. In P. Aghion & S. N. Durlauf (Eds.), Handbook of economic growth (pp. 385–472). North Holland.

    Google Scholar 

  • Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. Crown Publishers.

    Google Scholar 

  • Aghion, P., & Howitt, P. (1998). Endogenous growth theory. MIT Press.

    Google Scholar 

  • Aghion, P., & Howitt, P. (2009). The economics of growth. MIT Press.

    Google Scholar 

  • Almlund, M., Duckworth, A. L., Heckman, J., & Kautz, T. (2011). Personality psychology and economics. In E. A. Hanushek, S. Machin, & L. Woessmann (Eds.), Handbook of the economics of education, Vol. 4 (pp. 1–181). North Holland.

    Google Scholar 

  • Barro, R. J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(2), 407–443.

    Article  Google Scholar 

  • Barro, R. J. (1997). Determinants of economic growth: A cross-country empirical study. MIT Press.

    Google Scholar 

  • Barro, R. J., & Lee, J.-W. (1993). International comparisons of educational attainment. Journal of Monetary Economics, 32(3), 363–394.

    Article  Google Scholar 

  • Barro, R. J., & Lee, J.-W. (2001). International data on educational attainment: Updates and implications. Oxford Economic Papers, 53(3), 541–563.

    Article  Google Scholar 

  • Barro, R. J., & Lee, J.-W. (2013). A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics, 104, 184–198.

    Article  Google Scholar 

  • Barro, R. J., & Sala-i-Martin, X. (2004). Economic growth (2nd ed.). The MIT Press.

    Google Scholar 

  • Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. National Bureau of Economic Research.

    Google Scholar 

  • Benhabib, J., & Spiegel, M. M. (1994). The role of human capital in economic development: Evidence from aggregate cross-country data. Journal of Monetary Economics, 34(2), 143–174.

    Article  Google Scholar 

  • Benhabib, J., & Spiegel, M. M. (2005). Human capital and technology diffusion. In P. Aghion & S. N. Durlauf (Eds.), Handbook of economic growth (pp. 935–966). North Holland.

    Google Scholar 

  • Bils, M., & Klenow, P. J. (2000). Does schooling cause growth? American Economic Review, 90(5), 1160–1183.

    Article  Google Scholar 

  • Borghans, L., Duckworth, A. L., Heckman, J. J., & ter Weel, B. (2008). The economics and psychology of personality traits. Journal of Human Resources, 43(4), 972–1059.

    Article  Google Scholar 

  • Bowles, S., Gintis, H., & Osborne, M. (2001). The determinants of earnings: A behavioral approach. Journal of Economic Literature, 39(4), 1137–1176.

    Article  Google Scholar 

  • Brown, G., Micklewright, J., Schnepf, S. V., & Waldmann, R. (2007). International surveys of educational achievement: How robust are the findings? Journal of the Royal Statistical Society A, 170(3), 623–646.

    Article  Google Scholar 

  • Cunha, F., & Heckman, J. J. (2007). The technology of skill formation. American Economic Review, 97(2), 31–47.

    Article  Google Scholar 

  • Cunha, F., Heckman, J. J., Lochner, L., & Masterov, D. V. (2006). Interpreting the evidence on life cycle skill formation. In E. A. Hanushek & F. Welch (Eds.), Handbook of the economics of education (pp. 697–812). Elsevier.

    Google Scholar 

  • Ehrlich, Isaac. (2007, January). The mystery of human capital as engine of growth, or why the US became the economic superpower in the 20th century (NBER working paper 12868). National Bureau of economic research.

    Google Scholar 

  • Hanushek, E. A. (2002). Publicly provided education. In A. J. Auerbach & M. Feldstein (Eds.), Handbook of Public Economics, Vol. 4 (pp. 2045–2141). North Holland.

    Chapter  Google Scholar 

  • Hanushek, E. A. (2016). Will more higher education improve economic growth? Oxford Review of Economic Policy, 32(4), 538–552.

    Article  Google Scholar 

  • Hanushek, E. A., & Kimko, D. D. (2000). Schooling, labor force quality, and the growth of nations. American Economic Review, 90(5), 1184–1208.

    Article  Google Scholar 

  • Hanushek, E. A., & Woessmann, L. (2008). The role of cognitive skills in economic development. Journal of Economic Literature, 46(3), 607–668.

    Article  Google Scholar 

  • Hanushek, E. A., & Woessmann, L. (2011). The economics of international differences in educational achievement. In E. A. Hanushek, S. Machin, & L. Woessmann (Eds.), Handbook of the economics of education, Vol. 3 (pp. 89–200). North Holland.

    Google Scholar 

  • Hanushek, E. A., & Woessmann, L. (2012). Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation. Journal of Economic Growth, 17(4), 267–321.

    Article  Google Scholar 

  • Hanushek, E. A., & Woessmann, L. (2015a). The knowledge capital of nations: Education and the economics of growth. MIT Press.

    Book  Google Scholar 

  • Hanushek, E. A., & Woessmann, L. (2015b). Universal basic skills: What countries stand to gain. Organisation for Economic Co-operation and Development.

    Google Scholar 

  • Hanushek, E. A., & Woessmann, L. (2020). Education, knowledge capital, and economic growth. In S. Bradley & C. Green (Eds.), He economics of education: A comprehensive overview (pp. 171–182). Academic Press.

    Chapter  Google Scholar 

  • Hanushek, E. A., & Zhang, L. (2009). Quality-consistent estimates of international schooling and skill gradients. Journal of Human Capital, 3(2), 107–143.

    Article  Google Scholar 

  • Heckman, J. J., Stixrud, J., & Urzua, S. (2006). The effects of cognitive and noncognitive abilities on labor market outcomes and social behavior. Journal of Labor Economics, 24(3), 411–482.

    Article  Google Scholar 

  • International Monetary Fund. (2014). World economic outlook, October 2014. International Monetary Fund.

    Book  Google Scholar 

  • Jones, C. I., & Vollrath, D. (2013). Introduction to economic growth (3rd ed.). W.W. Norton and Company.

    Google Scholar 

  • Levine, R., & Renelt, D. (1992). A sensitivity analysis of cross-country growth regressions. American Economic Review, 82(4), 942–963.

    Google Scholar 

  • Levine, R., & Zervos, S. J. (1993). What we have learned about policy and growth from cross-country regressions. American Economic Review, 83(2), 426–430.

    Google Scholar 

  • Lindqvist, E., & Vestman, R. (2011). The labor market returns to cognitive and noncognitive ability: Evidence from the Swedish enlistment. American Economic Journal: Applied Economics, 3(1), 101–128.

    Google Scholar 

  • Lucas, R. E., Jr. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42.

    Article  Google Scholar 

  • Mankiw, N. G., Romer, D., & Weil, D. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2), 407–437.

    Article  Google Scholar 

  • Mincer, J. (1974). Schooling, experience, and earnings. NBER.

    Google Scholar 

  • Nelson, R. R., & Phelps, E. (1966). Investment in humans, technology diffusion and economic growth. American Economic Review, 56(2), 69–75.

    Google Scholar 

  • OECD. (2013). PISA 2012 results: What students know and can do – Student performance in mathematics, reading and science (volume I). Organisation for Economic Co-operation and Development.

    Google Scholar 

  • Organisation for Economic Co-operation and Development. (2013). PISA 2012 results: What students know and can do – Student performance in mathematics, reading and science (volume I). OECD.

    Google Scholar 

  • Pritchett, L. (2001). Where has all the education gone? World Bank Economic Review, 15(3), 367–391.

    Article  Google Scholar 

  • Pritchett, L. (2006). Does learning to add up add up? The returns to schooling in aggregate data. In E. A. Hanushek & F. Welch (Eds.), Handbook of the economics of education (pp. 635–695). North Holland.

    Google Scholar 

  • Romer, P. (1990). Endogenous technological change. Journal of Political Economy, 99(5,pt. II), S71–S102.

    Article  Google Scholar 

  • Sala-i-Martin, X., Doppelhofer, G., & Miller, R. I. (2004). Determinants of long-term growth: A Bayesian averaging of classical estimates (BACE) approach. American Economic Review, 94(4), 813–835.

    Article  Google Scholar 

  • Schultz, T. W. (1961). Investment in human capital. American Economic Review, 51(1), 1–17.

    Google Scholar 

  • Schumpeter, Joseph A. 1912[2006]. Theorie der wirtschaftlichen Entwicklung. Duncker & Humblot (English translation: The Theory of Economic Development).

    Google Scholar 

  • Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70(1), 65–94.

    Article  Google Scholar 

  • Welch, F. (1970). Education in production. Journal of Political Economy, 78(1), 35–59.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Stanford University, Stanford, CA, USA

    Eric A. Hanushek

  2. CESifo, Munich, Germany

    Eric A. Hanushek & Ludger Woessmann

  3. National Bureau of Economic Research, Cambridge, MA, USA

    Eric A. Hanushek

  4. IZA, Bonn, Germany

    Eric A. Hanushek & Ludger Woessmann

  5. University of Munich and ifo Institute, Munich, Germany

    Ludger Woessmann

Authors
  1. Eric A. Hanushek
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ludger Woessmann
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ludger Woessmann .

Editor information

Editors and Affiliations

  1. University of Oslo, Blindern, Oslo, Norway

    Trude Nilsen

  2. IEA Hamburg, Hamburg, Hamburg, Germany

    Agnes Stancel-Piątak

  3. University of Gothenburg, Gothenburg, Sweden

    Jan-Eric Gustafsson

Section Editor information

  1. University of Oslo, Oslo, Norway

    Sigrid Blömeke

Rights and permissions

Reprints and permissions

Copyright information

© 2021 Springer Nature Switzerland AG

About this entry

Check for updates. Verify currency and authenticity via CrossMark

Cite this entry

Hanushek, E.A., Woessmann, L. (2021). The Political Economy of ILSAs in Education: The Role of Knowledge Capital in Economic Growth. In: Nilsen, T., Stancel-Piątak, A., Gustafsson, JE. (eds) International Handbook of Comparative Large-Scale Studies in Education. Springer International Handbooks of Education. Springer, Cham. https://doi.org/10.1007/978-3-030-38298-8_4-1

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-38298-8_4-1

  • Received:

  • Accepted:

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-38298-8

  • Online ISBN: 978-3-030-38298-8

  • eBook Packages: Springer Reference EducationReference Module Humanities and Social SciencesReference Module Education

Publish with us

Policies and ethics

Search

Navigation