The quality vs. the quantity of schooling: What drives economic growth?

This paper challenges Hanushek and Woessmann's (2008) contention that the quality and not the quantity of schooling determines a nation's rate of economic growth. I first show that their statistical analysis is flawed. I then show that when a nation's average test scores and average schooling attainment are included in a national income model, both measures explain income differences, but schooling attainment has greater statistical significance. The high correlation between a nation's average schooling attainment, cumulative investment in schooling, and average tests scores indicates that average schooling attainment implicitly measures the quality as well as the quantity of schooling.

Research highlights
► I analyze whether test scores or years of schooling better explain economic growth.
► I show that Hanushek and Woessmann's (2008) JEL study is invalid.
► Either test scores or schooling attainment can explain national income differences.
► Schooling attainment has greater statistical significance than test scores.
► International test scores are an inaccurate measure of average school quality.