Education for Education...or for Skills? | World Bank Institute (WBI)

The World Bank Institute (WBI) is a global connector of knowledge, learning and innovation for poverty reduction. We connect practitioners and institutions to help them find suitable solutions to their development challenges. With a focus on the "how" of reform, we link knowledge from around the world and scale up innovations. Read More »

Education for Education...or for Skills?

Arne Hoel/The World Bank

Countries in the developing world were led to believe that education would put them on the path to becoming modern economies—and they responded enthusiastically. Education for All was a powerful message that has led to a veritable transformation of schooling throughout the world.

School attainment (the years of schooling completed by individuals) expanded dramatically. But many countries did not reap the promised rewards of economic success. While this has puzzled many, and has led to skepticism about the role of human capital development, the solution to the puzzle is evident. School attainment frequently expanded without a commensurate increase in achievement or cognitive skills, leading to unsatisfactory economic outcomes. Ensuring that schooling enhances cognitive skills will require different policies and institutions.


Investing in human capital is good policy, but execution has often been faulty. Too frequently, students have spent time in schools, but have not learned what their counterparts in developed countries learned. As a result, they have not become competitive in the world economy. Take Peru: 60 percent of students get at least nine years of schooling, yet only 20 percent of these reach the basic skill level of developed countries. Or Ghana, where 37 percent of students get at least nine years
of schooling, but only one in seven of these reach the basic skill level of developed countries.

It turns out that it is the skills that count. National growth rates are closely linked to achievement, and only if additional years of schooling lead to higher achievement will those years be productive.

Most policy makers cannot conceive of education without achievement. After all, schooling is about learning, and more schooling must lead to some improvement— this is just common sense, they say.


There is, however, mounting evidence to the contrary. High-quality studies of demand-side programs including fee reductions for students, conditional cash transfers, and school nutrition programs show that these initiatives tend to increase school attendance and attainment without increasing learning (Hanushek 2008). The problem is that these programs are directed solely at school attendance with no consideration of what goes on in the schools.

On the other hand, when a school program emphasizes achievement, such as Kenya’s scholarship program for girls (Kremer, Miguel, and Thornton 2009) which has the right incentives in place, learning does increase. Programs that emphasize education for all while ignoring the quality dimension do not serve the underlying purposes that motivate them (UNESCO 2005).


While demand-side approaches are important, there is no doubt that the supply of high quality schools is the main constraint: indeed, demand-side policies are unlikely to work if schools do not provide the right kinds of learning experiences. Formulating policies that ensure high-quality schools has been difficult. A policy maker’s first instinct is often to expand resources:

  • reducing class sizes,
  • increasing the qualifications of
  • teachers,
  • providing additional administrative support, and
  • generally sending more funds to
  • schools.


But research from both developed and developing countries has consistently shown that resource policies, by themselves, are unlikely to lead to the desired  achievement outcomes. Perhaps surprisingly, resource constraints are not the most significant challenge facing schools.


The most consistent research finding is that teacher effectiveness is the main determinant of high achievement. This finding may not in itself be particularly surprising; more instructive, however, is that effective teachers are not always the most experienced, the better trained, the more educated, or the better paid. In fact, it has been impossible to identify the characteristics of good teachers—those who produce large learning gains in their students.

Because the characteristics of good teaching are not well-described, it is impossible to identify and regulate the skills and approaches that make for a good teacher. This finding is important, because a common school improvement is to require more qualified teachers. But without a solid understanding of the teacher attributes, experience, or training that lead to better performance in the classroom, it is impossible to set qualification standards for effective teachers.


The alternative to regulation is to create incentives that will induce schools to seek out effective teachers and programs. Incentives, here, means providing rewards (either extrinsic or intrinsic) for better achievement or, conversely, punishment for poor achievement. Specifically, institutional policies that establish test-based accountability, that introduce school choice and competition, and that provide for local autonomy in decision making have been found to enhance student outcomes.

Over the last two decades, many countries have introduced accountability into their schools. The most celebrated are the “league tables” in the U.K. and the federal legislation under No Child Left Behind in the United States. Other countries have also started assessing student performance as a basis for rewarding and penalizing schools. Early evaluation of these programs points to their positive impacts on student achievement.

These kinds of accountability policies can also be used to provide learning incentives for students. In the previously mentioned Kenyan scholarship program, students responded to rewards: achievement rose when they were promised a grant for further schooling if they scored well on tests. Similarly, Bishop (2006)) shows that promotion and graduation standards for students can directly influence performance.

Giving parents and students choices about which school to attend can provide another set of incentives: as parents select schools that provide better learning opportunities, they put pressure on the other schools that do not attract large numbers of students.

Clearly, the power of choice depends on the range of opportunities available, and having a healthy and competitive market is important. Further, because the value of these incentives depends on parents systematically choosing high-quality schools, a good system of student testing and accountability will provide information on which to base their selection.

Establishing autonomy of decision making at the school level is important because local decision makers know the specific schooling challenges that they face and the local capacity to respond to these challenges. At the same time, local decision making must give priority to achievement, otherwise local schools might simply pursue policies that make life more comfortable for school personnel, for instance. Here, again, accountability policies must feature prominently. For example, the figure shows that letting local schools set salaries actually lowers achievement if there is no central testing, while the combination of local salary autonomy and accountability yields very large gains in student  performance.

Schools can provide the essential cognitive skills that lead to a country’s long-run economic growth, but simply providing more resources without paying attention to incentives is unlikely to lead to better performance.

Eric A. Hanushek is the Paul and Jean Hanna Senior Fellow in the Hoover Institution at Stanford University and a member of the Koret Task Force on K–12 Education.

Download the PDF (1.01MB) to view all images, graphs and additional information.