The Contribution of Education to Productivity: The Need for New Research and Possible NIE Roles in This Research.

Overview & Synopsis

Recent research leaves unsettled the role of education in the recent fall of productivity growth. Part of this dilemma is due to two major methodological problems in the estimation of education's contribution to productivity growth: the methods for deriving weights for returns to education, and the interaction among education and other factors influencing the quality of labor. To reduce these problems, researchers must derive alternative methods for growth-accounting research. New policies to increase productivity should be examined within a context that accords high priority to two policy concerns: equity and the level of government expenditure. Other areas to be examined include the disaggregation of returns to education, links between education and work, federal spending on education, education and taxes, and the effectiveness of schooling. The National Institute of Education can play one of several roles in resolving these methodological issues. For example, it could focus on a reexamination of the role of education in growth accounting, or it could examine a large number of the research issues relevant to the role of education in productivity growth, including the policy issues mentioned above. (This analysis is one in a series on the relationship between productivity and education.) (MN)