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World Bank—HSE University Webinar Examines the Costs of School Closures During the Covid-19 Pandemic

World Bank—HSE University Webinar Examines the Costs of School Closures During the Covid-19 Pandemic

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On May 21, the joint webinar series, ‘Education under COVID-19: Problems, Solutions, Perspectives, Research’ began with a session about the effects of school closures under the pandemic. Harry Anthony Patrinos of the World Bank presented the results of a model that he and a team of researchers developed in order to predict the extent to which the closures may reduce learning and lead to future losses in labor productivity and earnings for today’s students. The webinar was moderated by Isak Froumin (Head of the HSE Institute of Education), while Professors Tommaso Agasisti (School of Management, Politecnico di Milano) and Sergey Kosaretsky (Director of the HSE Centre of General and Extracurricular Education) served as discussants.

Social distancing requirements associated with COVID-19 have led to school closures worldwide. In mid-April, the World Bank was reporting that 192 countries had closed all schools and universities, affecting more than 90 percent of the world’s learners: almost 1.6 billion children and young people. The model created by Harry Patrinos (Practice Manager, Education Global Practice, the World Bank) and his colleagues (George Psacharopoulos, Victoria Collis, and Emiliana Vegas) aims to estimate the long-term effects of school closures from the perspective of wage loss due to loss of schooling. The work draws on the human capital theory which stipulates that education is an investment: if societies are deprived of the opportunity to invest, then the returns of that investment—namely, increased earnings—will likely go down.

Starting with the fact that every year of schooling equates to 8–9 percent in additional future earnings, Patrinos and his colleagues then used the number of months of education closures to estimate the loss in marginal future earnings. Their results show that the school closures will reduce future earnings, and that this loss is equivalent to 18 percent of future GDP. Their model also demonstrates that low-income students might be affected most.

Historical Clues: Previous Pandemics and School Closures 

In developing their model, Patrinos and his colleagues examined the economic effects of previous pandemics and school closures. According to Patrinos, studies have shown that previous pandemics (such as the Spanish influenza pandemic of 1918) reduced earners’ incomes by 5-9%. In addition, studies that look at the effects of recessions on graduates have shown that graduating in a recession year leads to losses in earnings that could last at least a decade. ‘The impact is about a 10% reduction in wages due to just graduating in a recession year,’ he said.

In order to examine the impact of school closures specifically, Patrinos and his team looked at the impact of past non-pandemic-related school closures, such as those in China after the Chinese Cultural Revolution, which led to a 35% decline in high school completion rates among the affected cohort, in addition to labor market outcomes a decade later. They also looked at rates of return to education during volatile economic periods in the last quarter of the twentieth century in countries such as Argentina, Mexico, and Venezuela.

'From the literature, we know that every year of schooling increases future earnings by about 9% a year. Using the 9% figure on additional earnings, we estimate how the number of months of closure will reduce your earnings. Applying this to the US, for example, we find that if a school is closed for 4 months, the loss in marginal future earnings is 2.5% a year, or a total of over $50,000.’

The Situation Today

Currently, there is the mitigating factor of distance learning, Patrinos says, but factors such as coverage, quality, and access, which cannot be ascertained at this point, make it difficult to estimate the extent to which it will reduce the negative impact of school closures. ‘The model also does not account yet for learning loss, which also affects earnings,’ he said.

In the United States, more than half of schools are closed until the fall, and some universities are not planning on opening in the fall. It remains to be seen how much education can be made up in online education measures.

With the currently available data, Patrinos and his colleagues predict that, in the US, the school closures will result in an earnings loss of $1,337 per year per student, or $33,464 (present value) of lost earnings over a lifetime. ‘This may seem like a small price to pay,’ he said, ‘but for society—for a school system of 76 million of students—we estimate that this could be up to 2.5 trillion dollars’ worth of earnings losses. This is a significant amount of resources lost just because of schooling being closed for just 4 months in the United States. This is the first estimate we have come up with.’

Global Impact and Recommendations

In terms of the global context, there are some global impacts that are clear, Patrinos says. The majority of the world’s students are in middle-income countries, and the higher losses will occur in high-income countries by nature of the fact that when you have more, you have more to lose. However, the losses for low-income countries could be the most devastating.

While the model does not account for differences in educational quality in different regions or distributional effects (such as gender, income level, labor sector, or education level), it clearly shows that governments should maintain and improve educational funding. Governments should maintain their expenditure levels on education and better target funds for those who have been hurt most by the school closures; they should provide income support for unemployment; and, lastly, they should invest in digital skills and technology, says Patrinos. ‘This last point is important even in higher-income countries’ he said. ‘It goes for both students and teachers.’

Distance Learning: A Mitigation Tool or Source of Further Division?

In his remarks, discussant Professor Tommaso Agasisti highlighted the importance of looking at the long-term effects of the crisis. ‘A lot of debate is focused on learning loss, but the angle that was presented about how this translates into income and wage loss is very important. And this helps us proceed to next problems – policy,’ he said.

Professor Agasisti also underscored the particular difficulties that today’s crisis presents for researchers. ‘I like the idea of looking at past pandemic as a benchmark,’ he said.

There is a big difference between today and the pandemics of the past. Then, the only source of inequality was different parents. But today, the digital tools which are meant to mitigate the effects of school closures are paradoxically also a source of inequality.

Professor Kosaretsky echoed the issue of access to technology in his remarks, presenting statistics about students in Russia. ‘Russia exhibits higher spatial disparities than comparable countries in terms of their digital preparedness and lack of resources to compensate for problems in families—this goes not only for poor but middle-class families. 44% have few or no laptops. Only a few number of regions can provide school laptops to students in need.’

A Framework for Finding Solutions

Concluding the session, Isak Froumin said, ‘I think that today we mainly started the discussion. We see what factors we have to take into account in analyzing differences in school outcomes and future labor market outcomes. Our webinar series will explore this area further with the aim of involving more researchers in this topic.’ He invited the participants to the next webinar on Tuesday, May 26, which will focus on income contingent loans for higher education.

The webinar series Education under COVID-19: Problems, Solutions, Perspectives, Research provides a venue for practitioners, policy makers and researchers to discuss and search for evidence-based responses to the major challenges education faces on the global, regional and national levels in the context of pandemic. The challenges relate (but not limited to) the following topics: economics of education (for instance, estimation of losses in terms of human capital and financing), sociology of education (how does the institutional landscape changes with the new players entering the field? What could the consequences of COVID-19 be for social mobility and inequality, especially for the underprivileged?). Other disciplines involved may be political science, pedagogy and psychology.

All webinars are held in English. Webinars can be accessed online via WebEx.

World Bank and HSE University joint webinar series

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