Working Paper BETA #2016-34

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Title : Does one size fit all? The impact of cognitive skills on economic growth

Author(s) : Nadir Altinok, Abdurrahman Aydemir

Abstract : Our paper reassesses the question of the impact of cognitive skills on economic growth using new indicators for cognitive skills. These data extend measures of cognitive skills substantively. In particular, our data extends the coverage of less developed countries, among them adding 27 countries of Sub- Saharan Africa, a continent that was largely missing from the analysis of the effects of learning outcomes on economic growth. Using this extended dataset and employing several identification strategies, cognitive skills are found to have a positive impact on economic growth. We address the heterogeneity in the causal effect of cognitive skills on growth and show that the effect of skills on growth differs across regions and by the economic level of countries. Our results indicate that high-income countries should focus on increasing the number of high skilled pupils, while countries from Sub-Saharan Africa would benefit more by investing in the development of basic skills.

Key-words : Education Quality, Cognitive Skills, PISA, Human Capital, Growth, Development.

JEL Classification : H5, I2, O4.