Education quality and economic performance in Europe

Abstract

The paper reflects on the role played by human capital in the continued diversity of growth dynamics in Europe. Given the increasing convergence in terms of the average years of schooling, we claim that it is the quality more than the quantity of education that matters for economic growth in advanced countries. Using EU27 country data to estimate a growth regression model, we test for the significance of several human capital measures drawing on education level and quality. Average years of schooling and the percentage of labour force with tertiary education are used to measure education stock. For education quality we use the share of graduates in higher education by educational field and the PISA mean scores in reading, maths and science. Our research findings indicate that particular kinds of human capital seem to be more important than others in explaining the growth rates of EU countries from 2000 to 2010. Although positively related to GDP per capita growth, higher education levels were not statistically significant. Specific kinds of higher education, such as science, maths and computers, appear to be more relevant; on the other hand, PISA scores do not seem to have a significant impact on growth. These results suggest relevant policy implications as research, innovation and education are core elements of the European growth strategy. A larger proportion of the workforce with tertiary education and also a diversified pool of qualifications could be of benefit to Europe's economic performance. In particular, high qualifications in science and technology appear as very relevant for innovative performance. The quality of education systems, measured by PISA scores, may have a delayed and indirect effect on economic growth. Progress can be made in higher education, and especially in science and technology, by systematically improving cognitive skills at school, notably mathematics and science literacy.