Events

Economics Seminar

Author:

• Chong Xiang
  Purdue University

• Stephen Ross Yeaple
  Penn State University and NBER

The quality of a country's educational infrastructure is a crucial determinant of economic well-being. Therefore, the comparisons of the relative strength and weakness of educational systems across countries are critical for both academic re-search and policy-making. A common approach measures the comparative quality of educational systems directly using international test scores. Aspects of educational quality that are ill-measured by exams, however, are neglected in such analyses. In this paper, we develop a general equilibrium framework that allow educational outcomes to vary in the extent to which they are readily quantified on exams. Our framework allows inference along multiple dimensions of educational quality and provides a method for aggregating over these dimensions to construct a single measure of institutional quality. Many countries that score well on international exams fair poorly according to our measure. Our comparative static results suggest important tradeoffs across educational dimensions, and spell out the implications of educational-institution qualities for aggregate output.