A new macroeconomic measure of human capital exploiting PISA and PIAAC: linking education policies to productivity

This paper develops a new measure of human capital, calculated as a cohort-weighted average of the quality of education (PISA scores) and the quantity of education (mean years of schooling). Contrary to the existing studies, the relative weights of quality and quantity are estimated (and not calibrated). The quality of education is estimated to be three to four times more important for education than the quantity of education. The new measure has a strong link to productivity, which materialises with long lags. Productivity gains are much greater from improvements in the quality than quantity component of human capital.