Universal Basic Skills WHAT COUNTRIES STAND TO GAIN Universal Basic Skills: WHAT COUNTRIES STAND TO GAIN Eric A. Hanushek and Ludger Woessmann This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2015), Universal Basic Skills: What Countries Stand to Gain, OECD Publishing. http://dx.doi.org/10.1787/9789264234833-en ISBN 978-92-64-23481-9 (print) ISBN 978-92-64-23483-3 (PDF) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Photo credits: © Istock.com/Riccardo Lennart Niels Mayer © Istock.com/shironosov © corbis_infinite - Fotolia.com © Istock.com/Zurijeta © freshidea - Fotolia.com Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2015 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]. Foreword Economic growth and social development are closely related to the skills of the population, indicating that a central post-2015 development goal for education should be that all youth achieve at least basic skills as a foundation for work and further learning, not merely that they gain access to schooling. Achieving such a goal would lead to remarkable overall economic gains while providing for broad participation in the benefits of development and facilitating poverty reduction, social and civic participation, health improvement, and gender equity. To inform the post-2015 development agenda, this report provides the most comprehensive picture to date of the quality of learning outcomes around the world and then estimates the long-term economic gains of improving access to education and raising the quality of learning outcomes. The economic benefit of achieving universal basic skills has tremendous potential as a way to address issues of poverty and limited healthcare, and to foster the new technologies needed to improve the sustainability and inclusiveness of growth. No substitute for improved skills has been identified that offers similar possibilities of facilitating the inclusive growth needed to address the full range of development goals. As the report shows, many countries could feasibly meet the goal of universal basic skills over the next decade and a half, assuming they duplicate the record of the most rapidly improving education systems. The report was written by Eric Hanushek, Senior Fellow, Hoover Institution of Stanford University and Ludger Woessmann, Professor of Economics, University of Munich and Director, Ifo Center for the Economics of Education. The project was suggested by Andreas Schleicher, who provided valuable comments along the way. He and Qian Tang wrote the editorial. Christian Kastrop and other members of the OECD Economics Department provided helpful comments and suggestions; the PISA Governing Board also provided comments and advice. Juliet Evans provided an array of useful information about the PISA tests. The OECD provided the boxes on country improvements in PISA. Anne Himmelfarb provided exceptional editorial assistance. The production of the report was co-ordinated by Sophie Limoges and Marilyn Achiron. Support was provided by the Hoover Institution. UNIVERSAL BASIC SKILLS: WHAT COUNTRIES STAND TO GAIN © OECD 2015 – 3 Table of contents Editorial .................................................................................................................................. 9 Executive summary ......................................................................................................... 15 Chapter 1 THE CASE FOR PROMOTING UNIVERSAL BASIC SKILLS ��� 19 Economic growth and sustainable social development ...................................... 20 A new definition of literacy ........................................................................................... 21 Structure of the report .................................................................................................... 22 Chapter 2 ReLATIONSHIP BETWEEN SKILLS AND ECONOMIC GROWTH .................................................................................................... 25 Chapter 3 THE GOAL: EVERY YOUNG PERSON ACQUIRES BASIC SKILLS ......................................................................................................... 29 Chapter 4 DISTANCE FROM THE GOAL OF BASIC SKILLS FOR ALL ... 35 Average achievement and lack of basic skills in participating countries ............................................................................................. 36 Achievement of other countries on regional tests ............................................... 41 School enrolment in participating countries .......................................................... 43 The development challenge .......................................................................................... 44 Chapter 5 ECONOMIC IMPACTS OF ACHIEVING THE BASIC SKILLS GOAL BY 2030 ......................................................................................... 47 Projection model and parameter choices ................................................................ 48 Increasing average achievement of current students by 25 PISA points .... 49 Achieving gender equality in achievement among current students ........... 51 Scenario I: Each current student attains a minimum of 420 PISA points ... 54 Scenario II: Achieving full participation in secondary school at current quality................................................................................................................................... 58 Scenario III: Achieving full participation in secondary school and every student attains a minimum of 420 PISA points ................................................... 61 Scenario IV: Scenario III with 30-year improvement ........................................... 66 Robustness of projections ............................................................................................ 68 Summary of the economic impacts of educational improvement .................. 71 4 – UNIVERSAL BASIC SKILLS: WHAT COUNTRIES STAND TO GAIN © OECD 2015 Chapter 6 SHARING THE BENEFITS OF UNIVERSAL BASIC SKILLS ... 75 Variations in skills and in income ............................................................................. 76 Basic skills for all and/or cultivating top achievers .............................................. 77 Chapter 7 WHAT ACHIEVING UNIVERSAL BASIC SKILLS MEANS FOR THE ECONOMY AND FOR EDUCATION ........................... 81 Annexes Annex A REVIEW OF KNOWLEDGE CAPITAL AND GROWTH ............ 88 Annex B TRANSFORMING PERFORMANCE IN TIMSS ONTO THE PISA SCALE .................................................. 95 Annex C AUGMENTED NEOCLASSICAL RESULTS .................................... 99 Annex D DISTRIBUTION OF SKILLS WHEN GOAL OF UNIVERSAL BASIC SKILLS IS ACHIEVED ............................................................ 102 Annex E SAMPLE OF PISA QUESTIONS REQUIRING LEVEL 1 SKILLS ..................................................................................... 103 UNIVERSAL BASIC SKILLS: WHAT COUNTRIES STAND TO GAIN © OECD 2015 – 5 Figures Figure ES.1 Effect on GDP of achieving universal basic skills (in % of current GDP) ...................................................................17 Figure 2.1 Knowledge capital and economic growth rates across countries ..........................................................................26 Figure 4.1 Average performance on international student achievement tests .......................................................................37 Figure 4.2 Share of students not acquiring basic skills..............................38 Figure 4.3 Average performance of Latin American countries on international and regional student achievement tests .............41 Figure 4.4 Average performance of sub-Saharan African countries on international and regional student achievement tests .............42 Figure 4.5 Secondary school enrolment rates .............................................44 Figure 5.1 Effect on GDP of every current student acquiring basic skills (in % of current GDP) ...................................................................57 Figure 5.2 Effect on GDP of universal enrolment in secondary school at current school quality (in % of current GDP) .........................61 Figure 5.3 Effect on GDP of universal enrolment