Economic Gains from Educational Reform by US States

Eric A. Hanushek
Jens Ruhose
Ludger Woessmann
Published Date
Winter 2017
Journal of Human Capital
pp. 447-486

There is limited existing evidence justifying the economic case for state education policy. Using newly-developed measures of the cognitive skills of workers in each state that allow for selective internal migration and foreign immigration, we provide preliminary estimates of growth regressions that incorporate worker skills. Our descriptive models show that educational achievement predicts economic growth across U.S. states over the past four decades. Based on projections from our growth models, we show the substantial potential scope for state economic development through improving the quality of schools. While we consider the impact for each state of a range of educational reforms, an improvement that moves each state to the best-performing state would in the aggregate yield an estimated present value of long-run economic gains of 8 percent of discounted future GDP.