This World Bank paper looks beyond our borders to determine the marginal loss of income and equity associated with slower rates of human-capital accumulation in the developing world. In layman’s terms (though the dense economic paper never affords them to the reader): How much does each additional year of schooling affect a country’s economic growth and social equity? Using a new data set, the paper looks at 146 developing nations and draws a few interesting conclusions. First, the authors conservatively estimate a 7 to 10 percent average per capita income gain for each additional year of schooling, as well as a societal-inequity reduction of 1.4 points on the Gini index. Further, countries whose average educational attainments have reached the level of basic literacy (i.e., they’ve moved from five to six attained years of schooling) see a net increase of 15.3 percent to their per capita income. Comparing Pakistan and South Korea, the paper reports that, in 1950, both countries had similar per capita incomes ($643 and $854 in constant dollars, respectively). But as South Korea’s educational attainment rose—by 2010 it had reached 11.8 years, dwarfing Pakistan’s 5.6 years—so did its income level. In 2010, South Koreans, on average, made $19,614 compared to Pakistan’s $2,239. As the authors are quick to remind, there are many caveats associated with research of this nature (the effect of externalities, the self-employed, whether a country simply strikes oil or a gold mine, etc.). But the correlations cannot be discounted and lessons for the United States still remain, as some state and city attainment rates fall far below their peers—and as the variant quality of the education doled out leaves some Americans years behind.
Harry Anthony Patrinos and George Psacharopoulos, “Education: Past, Present, and Future Global Challenges,” (Washington, D.C.: The World Bank Human Development Network, March 2011).
