Returns to education over the past half-century have beaten the American stock market (News and Research 92)


From The Economist: Even though more people are doing it, studying is still worthwhile


Which has provided a better return in recent decades: America’s stockmarket or education? The latter, according to a research review by George Psacharopoulos and Harry Patrinos for the World Bank. The two economists looked at 1,120 studies, across 139 countries, and came up with an annual average “rate of return”—actually a pay premium, the increase in hourly earnings from an extra year of schooling—of 8.8%. The analogy is inexact, but for comparison America’s stockmarket returned an annual 5.6% over the past 50 years…

A randomized evaluation of a low-cost and highly scripted teaching method to improve basic early grade reading skills in Papua New Guinea  Early grade literacy skills are crucial for children’s future education and ultimately their contribution to human capital formation and economic development. A significant challenge in development is identifying low-cost interventions to improve early literacy skills in contexts characterized by varying teacher ability and severe budget constraints. This paper evaluates the impact of Papua New Guinea’s randomized Reading Booster Programme, which was conducted in Madang and Western Highlands Province in 2013 and 2014, respectively. The program provided teachers with training on a highly structured teaching method that they could apply one hour per day within the teaching time allocated to reading. Using the randomized assignment of schools into the program, the paper shows that it had a substantial impact on the reading skills targeted by the program for third grade students, ranging from 0.6 to 0.7 standard deviation. Large effects on other reading skills were found for girls but not boys. The program’s cost per student was approximately US$60.

Who benefits from dual training systems? evidence from the Philippines  Rising youth unemployment rates have been increasingly recognized as a serious challenge in developing and advanced economies, as the trend indicates a potential skills gap between the demands of the workforce and recent graduates. Effective dual education… See More + Rising youth unemployment rates have been increasingly recognized as a serious challenge in developing and advanced economies, as the trend indicates a potential skills gap between the demands of the workforce and recent graduates. Effective dual education programs utilizing a combination of classroom instruction and practical skill training present an approach to developing a skilled workforce and meeting workforce demands. To evaluate the impact of the Philippine Dual Training System on labor market outcomes, this paper analyzes data from a recent survey tracking graduates from the Dual Training System and regular vocational training programs provided by technical vocational training institutes. The data analysis reveals that the Dual Training System has a significantly higher rate of return on labor market earnings compared with regular, classroom-only vocational training programs, particularly among high school graduates who did not perform well academically during basic education. The magnitude of the impact of the Dual Training System is also likely to increase in correlation with the intensity of the on-the-job component.

Takeaways from the Global Education & Skills Forum in Dubai  Amid the glitz of the Global Education and Skills Forum 2018 in Dubai last month, Harry Patrinos and I joined a list of high-caliber speakers who talked about everything from education technology and teacher recruitment to special education and classrooms in conflict zones.  We can prove we were there, because one of the featured organizations, Blockcerts, provided participants a certificate of attendance – using Blockchain – which we will be able to share and verify for our lifetime…

My recent presentation at the Global Schools Forum conference in Switzerland where I discuss the global dataset on education quality:

A billionaire philanthropist says it’s time to put an economic value on human health  Is it craven to attach a monetary value to a child’s health? Michael Milken, influential billionaire philanthropist and former financier, argues that it’s not. To him, it’s quite the opposite. In a seminar this week on the future of health, at the annual Milken Institute Global Conference in Los Angeles, the former junk-bond king underlined his support of the World Bank’s forthcoming Human Capital Index project, due to be released later this year. It will rank countries according to how much they invest in the health and education of their people, and how much impact those investments have. It’s a project championed by World Bank president Jim Kim, who spoke on the same panel as Milken at the event. The ranking, Kim said, should lead to a change of behavior in leaders of developing countries, who have too often in history prioritized spending on hard infrastructure rather than “softer” investments in things like life-saving vaccines and better education—even though data show that investing in education and health is crucial to increasing a country’s wealth…

The “Pupil” Factory: Specialization and the Production of Human Capital in Schools … a randomized field experiment in traditional public elementary schools in Houston, Texas designed to test the potential productivity benefits of teacher specialization. The average impact of encouraging schools to specialize their teachers on student achievement is −0.11 standard deviations per year on a combined index of math and reading test scores. I argue that the results are consistent with a model in which the benefits of specialization driven by sorting teachers into a subset of subjects based on comparative advantage is outweighed by inefficient pedagogy due to having fewer interactions with each student, though other mechanisms are possible…

Does money matter? The effects of block grants on education attainment in rural China: Evidence from intercensal population survey 2015 Considerable disagreement exists on the impacts of intergovernmental transfers in improving education access and outcomes. This is further complicated by the fungibility of these transfers, especially in a developing country setting. This study examines the effects of the block grant established by the Chinese government to subsidize the operating costs of rural compulsory education in 2006 on education attainment in a difference-in-difference framework. Comparing students whose compulsory schooling was completed just before or after the reform in counties receiving higher and lower percentages of their operating costs from higher-level governments, we find that a 20% increase in subsidies received from higher levels of government has led to 0.21 more years of schooling completed (0.07 standard deviation) and a 2.2 percentage points rise in the probability of completing compulsory education (0.08 standard deviation). These findings have implications not just for China but also for other developing countries which aim to achieve universal compulsory education…

Categories Human capital, Returns to education

1 thought on “Returns to education over the past half-century have beaten the American stock market (News and Research 92)

  1. What would you call the main success in your life at the moment?


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