A Comparative Analysis of Education Costs and Outcomes: The United States vs. Other OECD Countries

67 Pages Posted: 28 Jun 2013

See all articles by Edward N. Wolff

Edward N. Wolff

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER); Bard College - Levy Economics Institute

William J. Baumol

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies; Leonard N. Stern School of Business - Department of Economics

Anne Noyes Saini

Princeton University - Department of Economics

Date Written: June 26, 2013

Abstract

In this paper we confirm the universality of steadily rising education expenditures among OECD nations, as predicted by “Baumol and Bowen’s cost disease,” and show that this trajectory of costs can be expected to continue for the foreseeable future. However, we find that while the level of education costs in America is significantly higher than that of all other OECD countries, education spending per student in the United States is increasing about as quickly as it is in many other countries — perhaps even less quickly. Although these cost increases undoubtedly will contribute to each nation’s fiscal problems, we conclude that effective education contributes to improvement of the economic performance of each country and can mitigate resulting financial pressures by spurring growth in overall purchasing power.

Keywords: cost disease, education, costs, productivity, international comparison

JEL Classification: I22, I24, I28

Suggested Citation

Wolff, Edward N. and Baumol, William J. and Saini, Anne Noyes, A Comparative Analysis of Education Costs and Outcomes: The United States vs. Other OECD Countries (June 26, 2013). Available at SSRN: https://ssrn.com/abstract=2285597 or http://dx.doi.org/10.2139/ssrn.2285597

Edward N. Wolff (Contact Author)

New York University (NYU) - Department of Economics ( email )

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Bard College - Levy Economics Institute

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William J. Baumol

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies ( email )

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Leonard N. Stern School of Business - Department of Economics

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Anne Noyes Saini

Princeton University - Department of Economics ( email )

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United States

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