• Andrew Leigh, Chris Ryan

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11 February 2008Using two series of data that ask overlapping questions to successive cohorts, Leigh and Ryan estimate how the literacy and numeracy skills of young Australian teenagers (aged 13–14) have changed over time. They find a small but statistically significant fall in numeracy over the period 1964–2003, and in both literacy and numeracy over the period 1975–1998. The decline is in the order of one-tenth to one-fifth of a standard deviation. Adjusting this decline for changes in student demographics does not affect this conclusion; if anything, the decline appears to be more acute. Next, they estimate long-run changes in real per-child school expenditure. This estimate varies somewhat according to the treatment of private spending, and the chosen price index, but their preferred estimate suggests that real per-child school expenditure increased by 10 percent over the period 1975–1998, and by 258 percent over the period 1964–2003. This increase in spending funded a substantial reduction in student–teacher ratios. Measuring productivity in terms of literacy and numeracy points per dollar, our results imply that the productivity of Australian schools may have fallen over the past 3–4 decades. Although they cannot account for all the phenomena that might have affected test score results, they identify a number of plausible factors that might have led to a drop in school productivity.