EDUCATION IN THE 21st CENTURY: MEETING THE CHALLENGES OF A CHANGING WORLD Conference Proceedings EDUCATION IN THE 21st CENTURY: MEETING THE CHALLENGES OF A CHANGING WORLD Editor Yolanda K. Kodrzycki Federal Reserve Bank of Boston 47th Economic Conference June 2002 The production of this volume was made possible through the efforts of Ann Eggleston, Kristin Lovejoy, and Kim Underhill of the Research Department of the Federal Reserve Bank of Boston. Charts and diagrams were prepared by Heidi Furse and Fabienne Madsen, also of the Research Department. I thank these individuals for their many contributions. Yolanda Kodrzycki Editor CONTENTS Foreword Cathy E. Minehan xi Overview Education in the 21st Century: Meeting the Challenges of a Changing World Yolanda K. Kodrzycki 1 Address American Leadership in the Human Capital Century: Have the Virtues of the Past Become the Vices of the Present? Claudia Goldin 25 Educational Attainment as a Constraint on Economic Growth and Social Progress Yolanda K. Kodrzycki 37 Discussion Lawrence F. Katz 85 Paulo Renato Souza 93 Social and Nonmarket Benefits from Education in an Advanced Economy Barbara L. Wolfe and Robert H. Haveman 97 Discussion Daron Acemoglu 132 T. Paul Schultz 137 Do State Governments Matter? Thomas A. Downes 143 Discussion Julian R. Betts 165 Michael A. Rebell 175 Address The Challenge of Transformation Michael Barber 181 Improving Educational Quality: How to Evaluate Our Schools? Eric A. Hanushek and Margaret E. Raymond 193 Discussion Peter J. Dolton 225 Thomas J. Kane 237 What Is the Appropriate Role for Student Achievement Standards? John H. Bishop 249 Discussion David N. Figlio 279 Ellen Guiney 285 Panel Discussion: Policy Implications Theories of Action for Effecting Education Reform Chester E. Finn, Jr. 291 Improving Education Outcomes: In Colleges, Universities, and Beyond Alan G. Merten 295 Improving Urban Public Schools: Suggestions for Teacher Union Leaders Richard J. Murnane 297 An Education Support System Warren Simmons 304 About the Authors 311 Conference Participants 317