Academic journal article Federal Reserve Bank of New York Economic Policy Review

Conclusions and Controversies about the Effectiveness of School Resources

Academic journal article Federal Reserve Bank of New York Economic Policy Review

Conclusions and Controversies about the Effectiveness of School Resources

Article excerpt

Both the U.S. public and U.S. policymakers pursue a love-hate relationship with U.S. schools. While a majority of parents believe that their children's schools are doing well, a majority also believe that the system as a whole needs help. Complicating this view is a variety of concerns about specific aspects of U.S. schools--they are too expensive, too rigid, too elitist, and too unequal.

During the past year, President Clinton has directed considerable government attention to U.S. education. This attention follows the lead of Presidents Bush and Reagan, who also focused on education policy, although the oversight of such policy is not the primary role of the federal government. President Bush, for example, in 1989 convened a historic gathering of the governors of all of the states to focus exclusively on issues of education. The governors set a series of lofty goals for the year 2000, including the goal that U.S. students should be first in the world in mathematics and science achievement. Unfortunately' we are now close to the year 2000, but we are not close to meeting the set goals.

This paper analyzes the current state of the education system in the United States. In the course of the paper, I will try to point out where controversy exists, particularly in academic discussions.


I begin with some overall observations and conclusions. The subsequent discussion will provide some of the relevant evidence and references to support my conclusions.

As a starting point, educational investments are very important to the U.S. economy, a fact that suggests there is much value in an aggressive human capital investment strategy. The U.S. economy has been built up largely by using a skilled labor force and has capitalized on the presence of skills, making human capital investments very important to the success of the overall economy. Moreover, many authors show that the labor market value of the increased skills, as measured by schooling level, has increased dramatically in recent years. I think this valuation demonstrates that the economy continues to need an increasingly skilled labor force. Recent work has also suggested that education is very important in boosting the growth rates of the nation as a whole and that a very important relationship exists between human capital and growth rates. Economists have recently spent considerable time and effort trying to understand why some countries grow faster than others. The majority opinion is that a nation's stock of human capital is an important component of differential growth rates. In addition, we have thought of education as a primary ingredient in providing equal opportunity to all members of society as a way of cutting down or breaking intergenerational correlations of income. Taken together, these benefits provide important and relatively uncontroversial reasons for us to continue our attention to education.

The controversies relate in small measure to how well we have been doing in providing education, but they relate more to what we should do in the future. My way of framing the issues follows.

First, U.S. students do not perform well compared with students from other countries. In international math and science exams, U.S. students have never performed very well relative to students of other countries. To compensate for this relatively low quality, the United States has historically had high levels of school attainment (years of schooling)--that is, the United States has substituted quantity for quality. Now, however, many countries that have had higher student achievement are beginning to rival the United States on quantity grounds. This suggests that the U.S. economy faces new and different levels of competition in the years ahead.

Second, the United States has made steady and large investments in human capital. The resources invested, however, have had little payoff in terms of student performance. …

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