On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. To underscore the seriousness of the situation, most countries have closed their schools for months to minimize the spread of the coronavirus and prevent hospital overcrowding. Two years later, students and teachers are returning to face-to-face classes with some concerns about the spread of coronavirus variants.
Educators, policymakers, parents and students are concerned about the impact of school closures on learning and socialization. World Bank Group President David Malpass said that “the pandemic has caused the greatest loss of human capital in living memory and the worst education crisis in a century”. Unfortunately, this large loss of human capital could lead to a large impact on the labor market in the future.
The invisible nature of educational losses
In many ways, the impact on the labor market will not be visible. None of the currently affected students will look at their pay slip in the future and see a pandemic-related tax cut. No national income account will reflect the magnitude of the loss, even if it quietly accumulates over time. But the loss will not be any less real because it is invisible. French economist, politician and journalist Frédéric Bastiat believed that pointing out the invisible losses in political debates is a social responsibility.
Meeting our social responsibilities by measuring the future invisible impact of the pandemic-related school closures is not easy. Some of the main measurement difficulties arise from the time lags between educational shocks and their consequences – a problem identified as early as 1890 by Alfred Marshall. By their very nature, the results of today’s educational decisions, whether made by policy makers or families, are only truly measurable after a long time, at which point very little can often be done to correct past mistakes. In other words, one must either be very patient or have a sophisticated research design to measure the impact.
Estimating the cost of school breaks: top-down and bottom-up
Researchers often use models with a small number of variables to quantify the likely impact of COVID-19-related school closures on people’s future incomes. This top-down approach typically relies on educated assumptions about the average years of school lost due to the pandemic, estimated returns to schooling, and other parameters such as B. the mitigating effects of distance learning. The approach reduces a complex world to rather simple aggregated models. But the complex features are often not apparent, making the top-down approach the best possible option for simulating the future impact of a shock (two examples of studies using this approach: one; two).
The main problem with the top-down approach is that it ignores bottom-up feedback effects: the mitigating factors that parents and students apply when schools close. Even under normal circumstances, families play a major role in raising children. But under extraordinary conditions such as those of the pandemic, family arrangements tend to gain in importance. For example, mentoring by family members, private tutoring arrangements, and online after-school classes likely played an important, if unknown, mitigating role during the pandemic.
A bottom-up estimate of the cost of leaving school
A new World Bank paper uses a previous episode of school closures – in Kuwait during the Gulf War (when Iraq invaded Kuwait) – to estimate the long-term impact of the current pandemic shock on affected students, who will end up working in Kuwait’s public sector top employment choice for Kuwaiti nationals. The school closure due to the Gulf War is analytically useful because it happened nearly 30 years ago, so any bottom-up feedback effects on labor market outcomes have already been exhausted. This earlier closure also shares many similarities with the current pandemic-related school suspension, allowing us to estimate the salary losses resulting from the pandemic-related education shock.
When Iraq invaded Kuwait and the Gulf War began, schools closed for the 1990-91 school year. As a result, many students in Kuwait lost access to formal schooling and only a few expatriate students were able to continue their education abroad. The following school year, when schools opened, was used to restore damaged school infrastructure and speed up school instruction so students could catch up. Nonetheless, the break resulted in lower performance in terms of average years of schooling. The reduced benefits led to long-term wage cuts for affected Kuwaiti students.
The newspaper estimates that boys in elementary school could lose more than $2,600 a year in wages during the pandemic-related school closures, and girls could lose more than $1,500 a year (Figure 1). Over their working lives, the average present value of lifetime earnings reduction could be more than $40,000 for the boys and almost $21,000 for the girls. Those are big losses. For comparison, monthly civil service salaries in 2019 imply average annual salaries of $62,000 for Kuwaiti men and $47,000 for Kuwaiti women.
Unfortunately, the results are both reassuring and troubling. They are reassuring because the magnitude of the estimated income losses is consistent with the top-down studies. Worryingly, however, the projected losses are likely to be large and prolonged, putting enormous pressure on policymakers struggling to contain the virus and keep their economies growing.