Great Learning

The Economic Impact of Achievement Gaps in Pennsylvania's Public Schools

Differences in academic performance across groups of students defined by race-ethnicity, socioeconomic status, and geographic location are a well-documented feature of the education landscape in the United States. Recent efforts to quantify the economic consequences of cross-group differences in student achievement and attainment demonstrate that there are substantial economic costs in terms of lost productivity and economic output when some groups of students lag in the skills and knowledge they bring to the labor market—shortfalls that are typically measured by scores on standardized achievement tests or in terms of educational attainment, such as the high school graduation rate. For instance, a 2009 study by McKinsey and Company (2009a, 2009b) estimated that race-ethnic gaps in student performance in the United States resulted in lost output equal to 2 to 4 percent of gross domestic product (GDP) as of 2008. The lost earnings for African-Americans and Latinos as a result of lower levels of academic achievement amounted to $120 billion to $160 billion in 2007.

The goal of RAND Corporation's study is to document the magnitude of the gaps in student performance for public school students in Pennsylvania and then to estimate the economic consequences of those education performance gaps. For measures of student performance, the study relies on Pennsylvania standardized achievement tests administered in 2013 in eighth grade as part of the Pennsylvania System of School Assessment (PSSA). Data from the 2013 National Assessment of Educational Progress (NAEP) are used to compare the performance of students in Pennsylvania with the performance of students in other states. RAND Corporation also examines results from the 2012 Programme for International Student Assessment (PISA) to determine how Pennsylvania students are likely to compare with students in other developed countries. Student attainment is measured by the four-year adjusted cohort graduation rate (ACGR), a consistent measure of on-time graduation available for all 50 states and the District of Columbia as of 2013. The economic analysis builds on the estimates of the gaps in student achievement and attainment, employing and extending methods used in the McKinsey and Company study (2009a, 2009b) to generate estimates specific to Pennsylvania. The analyses are reported in ranges, given uncertainty about the magnitudes of several key economic parameters used to derive the estimates.

In this summary, the study highlights key findings with respect to the size of student performance gaps in Pennsylvania and the associated economic costs of existing gaps, as well as the potential economic gains from closing gaps in the future.

Published: July 2015
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