What’s the Relationship Between School Quality and GDP?

Over the summer, education research wonks Eric A. Hanushek, Jens Ruhose, and Ludger Woessman published findings on the long-term economic impact of school improvement. This study draws a direct connection between school quality and economic growth, adding to a body of evidence demonstrating the benefits of education for individuals and society.

Here’s our CliffsNotes review of what you should consider before jumping to conclusions, and a few summative takeaways:

What should you consider before jumping to conclusions?

• Quantity and quality of schooling are used to calculate an individual’s labor and market skills. The authors combine quantity of schooling with a measure of knowledge capital (i.e. NAEP – the national’s report card on student achievement).
• Strong correlation between test scores and economic growth. Differences in achievement attainment account for 20-35 percent of variation in per-capita GDP among states.
• Big dollar figure estimates are:
  • Based on an 80-year projection. The authors estimated long-term economic impact based on the assumptions that educational reform would take 10 years to implement and another 50+ years to cycle through workforce.
  • Assume multi–state impact. That is to say, economic impact increases as other states also engage in reform; while the majority of workers remain in-state, some move out of state and impact the economies of other states.

What can we say?

1. We can make general statements about the link between improved quality of education and economic growth. For example:

• Investments in the quality public education translate into workforce quality and fuel economic growth.

• The future of our workforce and state economy is tied to the academic achievement and educational attainment of our students.

2. We can also summarize the Delaware-specific findings into a wonky, but technically accurate statement:

• According to the findings of researchers Hanushek, Ruhose, and Woessman, if Delaware and the nation raise student achievement to match the best state (MN), the projection indicates Delaware would see economic gains of upwards of $309B (407 percent of current GDP) over the next 80 years (2095).