Why Japan Gets “Less Bang for the Buck” From Its Educational Achievements

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Source: https://dataverse.nl/api/access/datafile/554105This is the third in a series begun in this post and followed by this.Smarter tools need smarter workers. Consider what today’s auto mechanic needs to know to work on the software-filled car of today. How can companies employ the latest in digital equipment and software if they can’t hire enough ICT professionals? Smarter products also need smarter consumers. How can you sell smart TVs or smartphones if your customer base is technophobic? Hence, improvement in “human capital” is indispensable to economic growth.If one measures human capital only by years of education and scores on international PISA tests, Japan excels. In 2020, Japan was third on the World Bank’s Human Capital Index, behind Singapore, Hong Kong, and just ahead of Korea. The US, by contrast, ranked only 35th, mainly because of the huge socioeconomic inequalities among students.If, however, one also includes a country’s ability to reap innovation and efficiency from all this learning, then the picture is very different. In the Human Capital Index published in the Penn World Tables, Japan has steadily dropped from 7th among rich countries in 1975 to 12th in 2023 (see chart at the top of this blog). The US ranked fifth because its companies were better able to transform learning into economic value.Why Does Japan Get Less Economic Output From Its Education Input?Why did Japan’s ranking fall?At one pole, 30% of Japan’s workers say they lack the specific skills needed to do their job well, the worst mismatch in the OECD. At the other end of the spectrum, 35%…