A comparative analysis of education costs and outcomes: The United States vs. other OECD countries

•Education expenditures among OECD nations are rising universally.•Education costs can be expected to continue rising for the foreseeable future.•Education costs in the U.S. are significantly higher than in OECD countries.•U.S. growth rate in education spending is the same, or lower than, OECD countries.•Some developments in education—e.g., technology—may constrain fiscal pressures.

In this paper we confirm the universality of steadily rising education expenditures among OECD nations, as predicted by “Baumol and Bowen's cost disease”, and show that this trajectory of costs can be expected to continue for the foreseeable future. However, we find that while the level of education costs in America is significantly higher than that of all other OECD countries, education spending per student in the United States is increasing about as quickly as it is in many other countries—perhaps even less quickly. Although these cost increases undoubtedly will contribute to each nation's fiscal problems, we conclude that effective education contributes to improvement of the economic performance of each country and can mitigate resulting financial pressures by spurring growth in overall purchasing power.