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I’ve said it would be better for the GOP presidential nominee if voters thought of him or her as having a great education plan rather than a great tax plan. Voters assume Republicans want to cut taxes. They’re probably a bit fuzzier on what the GOP wants to do about education, other than maybe school vouchers. But education is pro-growth. It is supply-side economics. Check out the new paper “Economic Gains for U.S. States from Educational Reform” by Eric Hanushek, Jens Ruhose, and Ludger Woessmann:
Our analysis of state economic development allows us to estimate the economic gain from improving the quality of K-12 schools in each state. Consistent with analysis of country differences in growth rates, we estimate growth regressions across U.S. states. We find that there is a strong relationship between a state’s growth and the quality of its workforce. Our measures of the human capital in each state directly link the productive skills of the workforce to the quality of schools in the state. …
Using our state growth results, we project out the economic value of improving schools in each state. While we consider a range of reform scenarios for education policy, our results suggest that feasible quality improvements are associated with very large economic returns that could exceed the total spending on K-12 education.
For example, the value of a reform that would lift each state to the currently top-performing state would amount to an aggregate $76 trillion for the United States. Our analysis shows that, because of the large differences in states’ current achievement levels, the economic value of such a reform differs widely across states. …
The impacts of educational improvements clearly take a considerable time to be realized. Improving the performance of today’s students does not lead to an improved labor force until these students have left school and entered into employment and until more skilled workers become a significant portion of the labor force. As a result, the economic gains come in the future – beyond the normal election cycles for current politicians.
To some, this discrepancy between terms in office and the economic returns to improved schools implies that politicians will not take optimal actions but instead will underinvest in improved schools. But, there are clear other examples where politicians take long-run actions that far exceed election cycles: actions of climate change or actions on procurement of new weapon systems for defense, for example. The future economic well-being of the U.S. depends on improvement of the American schools, and it seems overly cynical to presume that the elected leadership is incapable or unlikely to take actions that are distinctly in the long-run interest of their country.
Hey, $76 trillion is a big number! But we are talking over the course of nearly a century. A different way of putting it is that boosting educational attainment, if I read this right, would lift the long-run US annual GDP growth rate by a third of percentage point. That’s pretty significant when you are now talking about long-run growth of just 2 percent a year.