Education and Economic Prosperity

Overview

Using early international student achievement tests, my research with Eric Hanushek shows that the skills of the population are a decisive factor for the long-run growth of countries. Differences in the "knowledge capital" of nations can mostly account for the East Asian miracle and the Latin American growth puzzle, as well as for growth differences among developed countries. Knowledge capital also proves important for an understanding of differences in economic development across US states. The large growth effects of educational achievement imply that low educational achievement has huge economic costs.

Also at the individual level, people's skills prove to be an important determinant of income, employment, and success on the labor market. Various skill signals on the CV have positive effects on labor-market entry. Because of permanent technological and structural change, the advantage of vocational education over general education in the school-to-work transition can turn into a disadvantage over the life-cycle. Despite the importance of lifelong learning, unconditional vouchers for adult education do not prove particularly effective. Lifetime returns can be estimated for various educational degrees. All these results combine into a strong economic case for education.

Taking the perspective of economic history, we study the importance of education for Protestant economic history, for industrialization, for the fertility transition, and for secularization.

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Education and Economic Prosperity

Societal Prosperity: Economic Growth

Individual Prosperity: Labor Economics

Economic History

Overview