School Policy: Implications of Recent Research for Human Capital Investments

This paper reviews evidence on the economic impacts of human capital investment with an eye to where investment decisions might be made. While the evidence on actual impacts is quite clear, the evidence on how best to make the investments is less clear. Specifically, recent research underscores the prime importance of educational quality, as measured by cognitive achievement, and the much lower importance of pure school attainment. This research spans both developed and developing nations. On the other hand, on the key question how cognitive achievement can be improved, the relevant evidence is less clear. There is substantial evidence that simple resource policies have not worked in either developed or developing countries. On the other hand, the leading candidate for high impact is teacher quality, but research on this is largely confined to the United States.