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Title page 1

Contents 5

Abstract/Résumé 4

1. Introduction 7

2. Productivity and human capital accumulation: some stylised facts 9

2.1. Productivity growth has slowed across the OECD 9

2.2. The rate of human capital accumulation has slowed over time 10

2.3. The productivity slowdown coincided with a human capital deceleration 14

3. Human capital accumulation and education policies 16

3.1. Main channels affecting PISA test scores 16

3.2. The link between PISA scores and education policies, digital device usage and the COVID-19 pandemic 20

3.3. The economic significance of the estimated effects for education policy reforms 24

4. Accounting for the decline in PISA test scores since 2009 26

5. Human capital allocation and productivity growth 29

6. The future of human capital and productivity 33

6.1. Baseline scenarios 33

6.2. Policy reform scenarios 35

Concluding remarks 36

References 37

Appendix A. Productivity growth 39

Appendix B. Human capital growth 42

Appendix C. The link between human capital and productivity in the QASR framework 44

Appendix D. Detailed estimations results 46

Appendix E. Reform scenarios and the decomposition of drivers of PISA decline, country-specific results 49

Tables 6

Table 1. Restrictions applying to smartphone use in schools in OECD countries 19

Table 2. Drivers of PISA test scores - baseline regressions, 2009-2022 21

Table 3. Drivers of PISA test scores - additional policies, 2015-2022 22

Table 4. Drivers of PISA test scores - digital device use, 2018-2022 23

Table 5. Drivers of PISA test scores - COVID-19 effects, 2022 23

Table 6. The decomposition of drivers of declining PISA test scores, OECD average 29

Table 7. Human capital interacted with framework policies in the QASR Productivity regressions, 1985-2022 32

Figures 5

Figure 1. Productivity slowdown in the OECD 10

Figure 2. Human capital stock in the OECD, 1987-2022 11

Figure 3. Student test results in the OECD, 1970/1995-2022 12

Figure 4. Change in PISA scores over time and across OECD countries 13

Figure 5. Human capital accumulation and the productivity slowdown in the OECD, 1987-2022 14

Figure 6. Human capital and the productivity slowdown - country-specific estimates 15

Figure 7. Why did PISA scores decline? A framework for analysis 16

Figure 8. Education policies vary across OECD countries, 2022 24

Figure 9. Education policies vary across OECD countries, 2022 25

Figure 10. The scope for education policy reforms to lift PISA performance 26

Figure 11. Productivity, human capital accumulation and human capital utilisation & allocation 30

Figure 12. Human capital - productivity link varies across the OECD 31

Figure 13. Skill mismatches in OECD countries 31

Figure 14. Human capital pass-through to productivity, conditional on policies enhancing reallocation and adaptability 33

Figure 15. Projected future human capital and productivity without policy action 34

Figure 16. Projected future human capital and productivity with policy action 35

Boxes 6

Box 1. A novel measure of human capital stock combining education quality and quantity 11

Box 2. Assumption underlying the accounting framework 27

Box Tables 27

Table B2-1. Changes in the policy variables, OECD average 27

Appendix Tables 41

Table A1. Updated QASR Productivity regressions, 1985-2022 41

Table B1. Productivity and human capital growth, OECD, 1987-2022 43

Table D1. Subject-specific results, 2009-2022 46

Table D2. Full results, 2015-2022 46

Table D3. Full results, 2018-2022 47

Table D4. Full results, 2022 48

Table E1. The impact of potential country-specific education policy reforms on PISA scores 50

Table E2. Country-specific PISA effects of education policies, digital device use and Covid-19 51

Appendix Figures 39

Figure A1. Potential growth decomposition 39

Figure A2. Productivity slowdown in the OECD, 2016/19 vs. 1995-2000 41

Figure B1. Human capital growth and its components, OECD, 1987-2023 42

Figure C1. Human capital and the QASR framework 45

Figure C2. Human capital and productivity across countries 45

Figure E1. Macroeconomic effects of education and structural reforms 49

Appendix Boxes 44

Box C1. The OECD Quantification of Structural Reforms (QASR) framework 44

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