2351

LtWlS c. SOLMON

economics of education review

pergamon

1985

4

4

273-290

This paper assesses the impact of school quality on student outcomes, particulnrly iob performance, and subsequently on economic growth. It hcgins hy showing that ‘investment in human capital’ has evolved from being viewed as simply an investment of student time to including interactions hetwecn time and monetary resources which may serve to improve school quality. Evidence is provided from studies of both elementary/secondary schooling and post-secondary education, and from studies of developed and less developed nations. It appears that school quality has substantially greater impact on changes in students’ cognitive and behavioral outcomes in less developed than advanced countries. Yet school quality seems to effect lifetime earnings of all students regardless of the level of development of their nations. The paper explains why. in some cases, more years and money spent for schooling may not necessarily appear to reflect higher earnings. Explanations are provided for differences in the Impact of school quality on student changes. A major one is the fact that there are significantly diminishing returns tn expenditures on schooling. along with the fact that expenditure levels are so much lower in the poorer countries. Reasons are provided as to why, if institutional differences do not account for changes in students in wealthier nations. these differences should still account for differences in earnings. Factors such as measurement problems and institutional arrangements come into play in this regard. The paper concludes that improvement in the quality of schooling provided in developing countries may he more important for the future economic prospects of these nations in the long run than will expanded acccsh to poor quality education.