Working Paper: NBER ID: w15066
Authors: Eric A. Hanushek; Ludger Woessmann
Abstract: Economic development in Latin America has trailed most other world regions over the past four decades despite its relatively high initial development and school attainment levels. This puzzle can be resolved by considering the actual learning as expressed in tests of cognitive skills, on which Latin American countries consistently perform at the bottom. In growth models estimated across world regions, these low levels of cognitive skills can account for the poor growth performance of Latin America. Given the limitations of worldwide tests in discriminating performance at low levels, we also introduce measures from two regional tests designed to measure performance for all Latin American countries with internationally comparable income data. Our growth analysis using these data confirms the significant effects of cognitive skills on intra-regional variations. Splicing the new regional tests into the worldwide tests, we also confirm this effect in extended worldwide regressions, although it appears somewhat smaller in the regional Latin American data than in the worldwide data.
Keywords: Cognitive Skills; Economic Growth; Latin America; Education; Human Capital
JEL Codes: H4; I2; O4; N16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cognitive skills (G53) | GDP growth rates (O47) |
| Years of schooling (I21) | Economic growth (O49) |
| Cognitive skills and supportive institutions (O43) | Economic growth (O49) |
| Cognitive skills (G53) | Economic growth (O49) |
| Low levels of cognitive skills (G53) | Poor economic growth (O49) |