The Decline of Schooling Productivity in OECD Countries

Based on Baumol's cost-disease model, we develop two alternative measures of the change in the productivity of schooling. Both productivity measures are based on changes in the relative price of schooling. We find that in most OECD countries the price of schooling has increased faster in 1970–94 than would be compatible with constant schooling productivity. In addition, we show that the average performance of pupils has remained constant at best in most OECD countries. Our results imply a larger decline in the productivity of schooling in many OECD countries than in the United States.