This paper shows that cognitive skills can account for growth differences within the OECD, whereas a range of economic institutions and quantitative measures of tertiary education cannot. Under the growth model estimates and plausible projection parameters, school improvements falling within currently observed performance levels yield very large gains. The present value of OECD aggregate gains...

This report uses recent economic modelling to relate cognitive skills - as measured by PISA and other international instruments - to economic growth, demonstrating that relatively small improvements to labour force skills can largely impact the future well-being of a nation.