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The Political Economy of ILSAs in Education: The Role of Knowledge Capital in Economic Growth

Eric A. Hanushek, Ludger Woessmann
Published Date: 
Trude Nilsen, Agnes Stancel-Piątak, and Jan-Eric Gustafsson
International Handbook of Comparative Large-Scale Studies in Education

Economic theory suggests that the skills of a society’s population are important determinants of economic growth. ILSAs have been used to put these theories to an empirical test. This chapter provides an overview of models of the role of educational achievement in macroeconomic outcomes and summarizes empirical economic work using ILSAs to measure relevant skills. In economic terms, the aggregate cognitive skills of the population as measured by ILSAs can be interpreted as the knowledge capital of nations. The chapter concludes that there is strong evidence that the cognitive skills of the population – rather than mere school attainment – are powerfully related to long-run economic growth. The relationship between knowledge capital and growth proves extremely robust in empirical applications. Growth simulations reveal that the long-run rewards to educational quality are large but also require patience