How to Increase Economic Output by $112 Trillion!

Are you interested in improving economic growth and personal income in the U.S.? Here’s one way — good teaching. Take a look at the following graph.

Effective Teachers Raise Students' EarningAnalyzing the impact of good teachers (based on student achievement) and the impact of student achievement on lifetime earnings, Eric Hanushek estimates a good teacher (one in the top quarter in terms of effectiveness) each year produces over $350,000 more income for his/her students compared to an average teacher. On the the other hand, a poor teacher (one in the bottom quarter in terms of effectiveness) subtracts $350,000 in income each year of teaching compared to an average teacher. A good teacher at the 84th percentile will shift earnings up by more than $400,000 compared to an average teacher. The symmetry of the calculations prevail: A poor teacher at the 16th percentile (100-84) produces a negative outcome of $400,000 compared to an average teacher.

Effect on the Economy

What would happen, Hanushek wonders, to aggregate economic growth if poor teachers were replaced with good teachers, closing the achievement gap with Finland ( a high performing educational achievement country)? Here’s Hanushek’s startling estimate:

“Closing the achievement gap with Finland would, according to historical experience, have astounding benefits, increasing the annual growth rate of the United States by 1 percent of GDP. Accumulated over the lifetime of somebody born today, this improvement in achievement would amount to nothing less than an increase in total U.S. economic output of $112 trillion in present value. (That was not a typo—$112 trillion, not billion.)” (Author’s emphasis)

Hanushek goes on to discuss policy implications and salary politics associated with replacing poor teachers with good teachers. Hanushek raises an interesting question: How much are good teachers worth? I encourage you to read the full article.

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