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Does a generous welfare state crowd out student effort? Panel data evidence from international student tests

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Author Info
Justina Fischer
Torberg Falch

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Abstract

Student achievement has been identified as an important contributor to economic growth. This paper investigates the hypothesis that redistributive government activities have a negative effect on investment in human capital using data from international comparative student achievement tests in Mathematics and Science for over 70 countries during the period 1980 to 2003. In fixed effects models, the impact on student achievement of both government consumption and government social expenditures are negative and seem to be robust across different model specifications. The effect of social expenditures appears to be driven by spending on pensions and active labor market policies.

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Paper provided by Thurgauer Wirtschaftsinstitut, Universität Konstanz in its series TWI Research Paper Series with number 25.

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Date of creation: 2008
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Handle: RePEc:twi:respas:0025

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Keywords: Student achievement; welfare state; panel data; PISA; TIMSS;

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  5. Ehrlich, Isaac & Zhong, Jian-Guo, 1998. "Social Security and the Real Economy: An Inquiry into Some Neglected Issues," American Economic Review, American Economic Association, vol. 88(2), pages 151-57, May. [Downloadable!] (restricted)
  6. Fischer, Justina A.V., 2007. "The Impact of Direct Democracy on Public Education: Evidence for Swiss Students in Reading, Mathematics and Natural Science," Working Paper Series in Economics and Finance 688, Stockholm School of Economics. [Downloadable!]
  7. Hogan, Vincent & Walker, Ian, 2007. "Education choice under uncertainty: Implications for public policy," Labour Economics, Elsevier, vol. 14(6), pages 894-912, December. [Downloadable!] (restricted)
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  8. Eric A. Hanushek & Ludger Woessmann, 2007. "The Role of School Improvement in Economic Development," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  9. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 813-34, August.
  10. Folster, Stefan & Henrekson, Magnus, 2001. "Growth effects of government expenditure and taxation in rich countries," European Economic Review, Elsevier, vol. 45(8), pages 1501-1520, August. [Downloadable!] (restricted)
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  11. Hanushek, Eric A. & Luque, Javier A., 2003. "Efficiency and equity in schools around the world," Economics of Education Review, Elsevier, vol. 22(5), pages 481-502, October. [Downloadable!] (restricted)
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  12. Jacobs, Bas, 2007. "Real options and human capital investment," Labour Economics, Elsevier, vol. 14(6), pages 913-925, December. [Downloadable!] (restricted)
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  13. Markus Froelich & Jean Bourdon & Katharina Michaelowa, 2007. "Teacher Shortages, Teacher Contracts and their Impact on Education in Africa," University of St. Gallen Department of Economics working paper series 2007 2007-20, Department of Economics, University of St. Gallen. [Downloadable!]
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