The economic benefits of improved teacher quality

Abstract

Most developed countries are acutely aware of how their students do in comparison to those elsewhere in the world. The now frequent scores on PISA and TIMSS provide direct feedback on schools.1 But, as comparative test scores have become more plentiful, two key questions arise. First, do scores on these tests make any difference? Second, how can they be changed by any governmental policies? This chapter addresses both of these questions. Economists are now accustomed to looking at issues of human capital. The simplest notion is that individuals make investments in skills that have later payoffs in outcomes that matter. And, in this, it is commonly presumed that formal schooling is one of the several important contributors to the skills of an individual and to human capital. It is not the only factor. Parents, individual abilities, and friends undoubtedly contribute. Schools nonetheless have a special place because they are most directly affected by public policies. Much of the early and continuing development of empirical work on human capital concentrates on the role of school attainment, that is, the quantity of schooling. The revolution in the United States during the twentieth century was universal schooling. This has spread around the world, encompassing both developed and developing countries. Quantity of schooling is easily measured, and data on years attained, both over time and across individuals, are readily available. But quantity proves to be a poor measure of the skills of individuals both within and across countries. Today, policy concerns in most corners of the world revolve much more around issues of quality than issues of quantity. This brings us back to PISA and TIMSS. Do standardized tests such as these identify qualities that have economic benefits? The next sections assess what we know about the payoff to cognitive skills for individuals and for nations. In short, there are very large payoffs to such skills. Individuals with more measured cognitive skill systematically do better than those with less. And nations with a more skilled population grow faster than those with a less skilled population. The implications of this for policy have nonetheless been less clear. Simply providing more resources to schools has proved to be very ineffective. On the other hand, mounting evidence suggests that improving teacher quality is the one way in which student outcomes can be systematically improved. The results about the importance of teacher quality are related directly to the economic benefits of improved quality. © 2008 Springer.