Endangering Prosperity: A Global View of the American School

5. Economic Benefits of Higher Performance

57 America’s government-spending addiction and its lackluster system of public education are the two greatest impediments to achieving the country’s potential. —Jeb Bush, 2013 That the system of education in the United States is lackluster is indicated by the following four facts established in the previous chapters of this volume: —The acquisition of basic skills in reading and especially in mathematics in elementary and secondary school enhances a student’s long-term economic prospects. —A country that educates students to higher levels of achievement enjoys higher levels of economic productivity and more rapid rates of economic growth. —The United States is not providing an educational setting in which as large a percentage of students are reaching proficiency in math as thirty-one other countries in the industrialized world. Chapter Five ECONOMIC BENEFITS OF HIGHER PERFORMANCE 13291-05_CH05_3rdPgs.indd 57 6/6/13 10:44 AM 58 eConomiC BeneFits oF higher perFormanCe —Nor is the United States bringing as large a percentage of its students to the advanced level as twenty-nine other countries in the industrialized world. In this chapter we show that the effects of that lackluster system of education are more costly than the more politically salient deficit crisis to which Jeb Bush refers. We do so by identifying the magnitude of the benefits to the citizens of the United States that could accrue over the lifetime of those born today, were it to set in place policies that would bring its schools up to a worldclass level. Of course, schools per se are not the only influence on the acquisition of cognitive skills by the next generation. How much students learn is also affected by the care with which families raise their children as well as a variety of other factors, such as school peers, the noneducation social services available to those with disabilities and health problems, and the impacts of neighborhoods on motivation. But society generally does not intervene in what goes on in the family. It is the education system that has the primary public responsibility for facilitating the acquisition of knowledge and skills, and the best evidence available suggests that school quality is more important than any single factor other than the strength and well-being of the family within which a child is raised. And it is through the public education system that policymakers have the best chance of shifting the achievement levels of the next generation upward. The findings reported in this chapter, however, do not depend on exactly where and how gains in achievement are realized. If the educational capacities of U.S. families could be altered so that achievement levels were lifted to world-class levels, that too would yield the benefits shown below. It is only because schools are the primary public vehicle for enhancing student knowledge and skill that our discussion focuses on how improved schools can alter the chances of economic prosperity throughout the twenty-first century. 13291-05_CH05_3rdPgs.indd 58 6/6/13 10:44 AM 59 eConomiC BeneFits oF higher perFormanCe Simulating the Effects of Education Reforms on Future GDP Our analysis starts from the patterns of growth discussed in chapter 2, which indicate the long-run impact of having a labor force with varying skills as measured by mathematics and science scores. When using those estimates to project the economic impact of improved skills in the future, though, we have to take into account the fact that an education reform enacted today does not immediately change the skills of the labor force. For three reasons, an improved education system will have only a long-term, not an immediate, impact on economy growth. First, reforms that boost student achievement take time to implement and to have an impact on student performance. Second, the economic impact of improved skills will not be realized until the students with greater skills move into the labor force. Third, the economy will respond over time as new technologies are developed and implemented, making use of the newly acquired higher skills. In order to capture all three elements, we conduct a simple simulation.1 The underlying assumption, consistent with historical evidence, is that a more skilled labor force leads to higher long-run economic growth through the regular generation of new ideas and production processes. In other words, we assume that the economy in the future will respond in a fashion similar to the patterns observed...