Solow on education

MIT economist Robert Solow participated in a recent IMF conference on “Macro and Growth Policies in the Wake of the Crisis”. Camilla Andersen interviewed him for the IMF publication Finance & Development, asking “What is needed to put people back to work? The role of education in the economic growth of middle-income and low-income countries is an important issue.”

Here is Professor Solow’s response:

We economists tend to measure education by input, not output. We count how many years people have been in school. Instead of worrying so much about quantities of education, we ought to be thinking about the content of the education. What is it that primary school or secondary school kids in poor and middle-income countries need to know? This is not necessarily what they are being taught.

And by the way, the same holds for advanced countries and the United States. We measure our success in generating an educated population in terms of the fraction of the age group that is in college. I would be very interested in other kinds of postsecondary education that are skills-based and would equip people for the jobs that are likely to be available.

That is going to require that employers be involved in the planning of that sort of education. For the United States, and perhaps for much of the world, that is a wholly new idea.

Camilla Andersen, “Rethinking Economics in a Changed World“, Finance & Development (June 2011).

Anderson interviewed two other Nobel laureates – NYU economist Michael Spence and Columbia economist Joseph Stiglitz – and reports their comments as well.

Schooling is often included as an explanatory variable in models of economic growth, because it is believed to be an important determinant of technical progress.

Robert Solow (born 1924) is famous for the “Solow residual”, known also as “total factor productivity”, which is assumed to be a measure of technical change. More accurately, it is what is left ‘unexplained’ after regressing GDP on inputs, i.e. the residual of an aggregate production function.

TdJ has insisted, in numerous posts, that aggregate production functions – and measures derived from them – can only be understood as faith, not science. These posts are titled “economics as faith”; one of them focuses on attempts to measure technical change.

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