Test Scores and Income Inequalities

International surveys in education became to be a popular source of information about student performance in economics. Increasing number of countries is participating in these surveys which extends opportunities for international studies. There are three surveys which cover more than 40 countries. These are PISA conducted by OECD, and TIMSS and PIRLS conducted by the consortium created by International Association for the Evaluation of Educational Achievement (IEA). This paper focuses mainly on PISA study because it covers all OECD countries which are of main interest here. The Programme for International Student Assessment was launched in 2000, followed by surveys in 2003 and 2006. Next waves are planned for 2009, 2013 and 2015. PISA is focused on measuring and comparing achievement of 15-year-olds in domains of reading, mathematics, and science. In PISA 2000 there were 43 countries participating and in 2006 the number of countries increased to 57. Testing framework for PISA is based on the former experiences of IEA with sophisticated procedures developed to satisfy comparability across countries. Obviously, there are many critics who claim that strict comparability cannot be achieved, because of discrepancies in goals of participating countries school systems and problems with test translations. While such criticism could be compelling we are assuming here that PISA measures some general abilities which are needed in any modern society and economy. Thus, we abstract from the divergence of what schools in different countries are teaching. We are focused on what general skills students have at the end of compulsory education, which is in most countries about the age PISA surveys. We are interested whether distribution of these skills is affecting income inequalities. At the same time we are fully aware of methodological problems with the comparability of PISA results when one wants to relate them to economic outcomes. These methodological problems are analyzed below and this is one of the contributions of this paper.