The Economic Costs of School Closure

The Economic Costs of School Closure| (News and Research 371)

I attended the Lisbon Economics and Statistics of Education conference from January 17-19, 2024. It was very well organized and there were many interesting sessions. I spoke about the costs of the school closures due to the COVID-19 pandemic (see below). This 7th edition of the conference brought together researchers, students, and education analysts. The conference included invited lectures, debates, sessions, two round-tables and a one-day course on the application of Machine Learning to educational problems (Tommasso Agasisti) and a pre-conference workshop on PISA Data Analysis (Maciej Jakubowski & Tomasz Gajderowicz). I participated in the pre-conference seminar on PISA Math Results and What Do They Mean for Our Economies, along with Maciej Jakubowski. Keynote Speakers included Susan Dynarski and Kristof De Witte. Other speakers included João Marôco, Noam Angrist, and Carla Haelermans. A selection of papers presented or referenced by some of the speakers are described below.

From A to Z: effects of a 2nd-grade reading intervention program for struggling readers | Lopes, Martins, Oliveira, Ferreira, Oliveira, Crato | Many children in primary grades show difficulties with reading fluency, hardly reading text, or doing it effortfully and fruitlessly, making intervention programs for struggling readers a priority for researchers and schools. This paper analyzes the results of a reading intervention program for 182 second-grade struggling readers (boys = aged 7-8 46.7%) from public schools. Students received a multi-component program, including repeated readings, word recognition, morphological analysis, text interpretation, and writing skills. Participants received about fifty 45-minute intervention sessions over the school year. Using a difference-in-differences, quasi-experimental between- (intervention and control group) and within-group longitudinal design (three-point measurements), we found that the intervention group progressed significantly faster than a classmate control group (n = 827, boys = aged 7-8, 52.4%) in all reading outcomes (speed, accuracy, and expressiveness). By the end of the school year, differences between the intervention and control groups in accuracy and expressiveness become small but are still large in reading speed. Implications for research and practice are presented at the end of the paper.

The Power of Certainty: Experimental Evidence on the Effective Design of Free Tuition Programs | Burland, Dynarski, Michelmore, Owen, Raghuraman | Proposed “free college” policies vary widely in design. The simplest set tuition to zero for everyone. More targeted approaches limit free tuition to those who demonstrate need through an application process. We experimentally test the effects of these two models on the schooling decisions of low-income students. An unconditional free tuition offer from a large public university substantially increases application and enrollment rates. A free tuition offer contingent on proof of need has a much smaller effect on application and none on enrollment. These results are consistent with students placing a high value on financial certainty when making schooling decisions.

Inequality in the Effects of Primary School Closures Due to the COVID-19 Pandemic: Evidence from the Netherlands | Haelermans, Jacobs, van der Velden, van Vugt, van Wetten | Using a large dataset of around 500,000 students from about 1,900 schools, this paper shows the effect of two school closures and 1.5 years of the COVID-19 pandemic on standardized learning growth for mathematics, reading, and spelling in Dutch primary education. We find that the school closures have a negative effect on standardized learning growth, amounting to an annual average of 5.5 weeks of learning loss. When analyzing differential effects by socioeconomic status, parental education, household income, household structure, household size, and migration status, we find that the negative effect is larger for the more vulnerable students.

Experimental evidence on learning using low-tech when school is out | Angrist, Bergman, Matsheng | School closures occurred extensively during the COVID-19 pandemic, and occur in other settings, such as teacher strikes and natural disasters. The cost of school closures has proven to be substantial, particularly for households of lower socioeconomic status, but little evidence exists on how to mitigate these learning losses. This paper provides experimental evidence on strategies to support learning when schools close. We conduct a large-scale randomized trial testing two low-technology interventions—SMS messages and phone calls—with parents to support their child in Botswana. The combined treatment improves learning by 0.12 standard deviations, which translates to 0.89 standard deviations of learning per US$100, ranking among the most cost-effective interventions to improve learning. We develop remote assessment innovations, which show robust learning outcomes. Our findings have immediate policy relevance and long-run implications for the role of technology and parents to support education provision during school disruptions.

Building Resilient Education Systems: Evidence from Large-Scale Randomized Trials in Five Countries | Angrist, Ainomugisha, Bathena, Bergman, Crossley, Cullen, Letsomo, Matsheng | Education systems need to withstand frequent shocks, including conflict, disease, natural disasters, and climate events, all of which routinely close schools. During these emergencies, alternative models are needed to deliver education. However, rigorous evaluation of effective educational approaches in these settings is challenging and rare, especially across multiple countries. We present results from large-scale randomized trials evaluating the provision of education in emergency settings across five countries: India, Kenya, Nepal, Philippines, and Uganda. We test multiple scalable models of remote instruction for primary school children during COVID-19, which disrupted education for over 1 billion schoolchildren worldwide. Despite heterogeneous contexts, results show that the effectiveness of phone call tutorials can scale across contexts. We find consistently large and robust effect sizes on learning, with average effects of 0.30-0.35 standard deviations. These effects are highly cost-effective, delivering up to four years of high-quality instruction per $100 spent, ranking in the top percentile of education programs and policies. In a subset of trials, we randomized whether the intervention was provided by NGO instructors or government teachers. Results show similar effects, indicating scalability within government systems. These results reveal it is possible to strengthen the resilience of education systems, enabling education provision amidst disruptions, and to deliver cost-effective learning gains across contexts and with governments.

The uphill battle: The amplifying effects of negative trends in test scores, COVID-19 school closures and teacher shortages | Gambi, De Witte | Abstract This paper investigates the education outcomes at the end of primary education in the presence of multiple shocks. Using the exact same formative test since 2019, we document how learning deficits accumulate over time due to existing negative trends in a school system and the amplifying effects of disruptions due to the COVID-19 pandemic. Comparing the standardised test data at school level from the Flemish region of Belgium before and after the school closures suggests that in three years’ time the grade 6 school education outcomes decreased on average by -0.47 SD in the Dutch language, -0.31 SD in the French foreign language, -0.12 SD in mathematics, -0.11 SD in science and remained the same in social sciences. At student level, the estimates present the same significance and direction of the sign, although with lower magnitude. The learning deficits seem to accelerate over time, partly driven by the weak performance of the best-performing students and exacerbated in schools with high shares of teacher shortages. Controlling for time varying and school fixed effects, one percentage point increase in unfilled vacancies is associated with a decrease of -0.04 SD in the Dutch language, and -0.05 SD in math proficiency. Summer schools seem to mitigate part of the learning deficits. The within-school inequality in test scores has not been reduced since the start of the pandemic. Despite an ongoing increase in between-school inequality in test scores, it slowed down in both 2021 and 2022.

COVID-19, School Closures, and Student Learning Outcomes: New Global Evidence from PISA | Jakubowski, Gajderowicz, Patrinos | Worldwide school closures due to COVID-19, starting in 2020, had varying reopening timelines. Some reopened quickly, while others remained closed for an extended period. Country-specific studies indicate substantial losses, potentially costing this generation trillions in lifetime earnings. Global assessments, such as the recent OECD PISA report covering 156 million 15-year-old students, reveal significant learning declines. Analyzing test scores from 2018 to 2022, we found an average 14% drop, equivalent to seven months of learning. Longer closures, gender disparities, immigrant status, and disadvantage increased these losses. The impact suggests potential long-term national income reductions. These findings are based on assessments of 175 million students in 72 countries.

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The Economic Costs of School Closures – Evidence from COVID-19

Something that affects us all, and is especially crucial for our young minds, is the far-reaching impact of pandemics, like the one we have been grappling with, namely COVID-19. This is a serious topic. Therefore, it is essential for all of us to grasp its significance and not shy away from it.

Pandemics are like seismic events in the health world, causing ripple effects across society. Take, for instance, the 1918 flu pandemic, which led to widespread school closures – a scenario we can relate to today. Astonishingly, the effects of that flu lingered for decades, influencing everything from education levels to overall well-being. Individuals born during that period faced challenges such as lower education, increased health issues, and even reduced earnings, with a notable 9 percent wage loss for men. The economic impact of the 2003 SARS outbreak in the UK, France, Belgium, and The Netherlands was estimated at 2 percent of GDP. The Black Death in 1347-52 caused significant deaths and affected economic activity.

All these events, including COVID-19, resulted in school closures. Education equips individuals with valuable skills for work, fostering higher productivity and economic growth. Conversely, a lack of schooling may diminish productivity and impede future economic growth.

Closures due to other reasons – teacher strikes, earthquakes and other natural disasters, weather, etc. – also lead to learning and later earnings losses. For instance, in 2005, following an earthquake in Pakistan, schools near the fault-line were closed for about two months. Four years later, students from these schools were 1.5 to 2.0 years behind in terms of learning compared to their counterparts who did not experience school closures.

School disruptions due to war have been associated with projected annual earnings losses of between 2 and 3 percent over the course of the affected students’ lifetimes. In Cambodia, exposure to civil conflicts during primary school age was estimated to depress the earnings of men between 6.6 and 8.6 percent but not the earnings of women.

During COVID-19, distance learning was not as effective as in-person teaching. We should have known since what we had during the school closures was emergency remote instruction – not purposeful, well-designed online education, or its superior version, hybrid education.

We should have known that schooling was in jeopardy given how important schooling is. Ample research shows that education leads to better outcomes later in life, including better health, employability, and earnings. For nations, as established by Nobel laureates Theodore Schultz and Gary Becker, investing in human capital leads to higher economic and social development.

Early Pandemic Estimates of Losses

Anticipating the effects of the school closures, which at the time circa March 2020, we assumed would be short-lived, many researchers forecast the educational and economic impacts of the closures. We joined efforts to estimate economic impacts based on future wage losses due to school closures, reducing schooling and, so, future earnings.

There is a strong, causal association between schooling and earnings. Moreover, the literature shows that education contributes to improvements in productivity and cognitive ability. Using conservative estimates, we assumed that each added year of schooling corresponds to an 8 percent increase in future earnings. A simple model was developed to assess the economic impact of school closures due to COVID-19. The losses are expressed in terms of lower wages due to lower productivity, and in terms of lost GDP. We use mean annual earnings and total number of students, control for the part of the school year when schools were closed and for distance teaching, the rate of return to a year of schooling, total number of students. We apply the model to three country income groups: low, middle, and high.

Conservative estimates projected lifetime losses in earnings of $3,000 in low-income countries, $7,000 in middle-income countries, and over $21,000 in high-income countries, and a global average of $11,000.

Now, picture this not only affecting you but over 1.5 billion students globally. The estimated lifetime losses range from $364 billion in low-income countries to $7 trillion in middle-income countries and $5 trillion in high-income countries, with a global impact of $15 trillion. The World Bank suggests the total cost could range from $17 to $21 trillion worldwide. It’s a staggering figure – trillion with a “T.”

School closures are expected to reduce global economic growth by an annual rate of 0.8 percent. Estimated national income losses are higher in low- and middle-income countries than in high-income countries. However, actual schooling losses were sometimes a year or more in some countries, resulting in lower learning outcomes.

So much for projections, what about actual losses?

Recent evidence shows actual learning losses. Using data on reading losses for 4th grade students, we estimate significant earning losses. Using PIRLS, we show that scores declined an average of 33 percent of a standard deviation, equivalent to more than a year of schooling. Losses are larger for students in schools that faced relatively longer closures. While there are no differences by sex, lower-achieving students experienced larger losses.

For 15-year-olds, we predict that every week of full school shutdown will result in a 0.44-point decrease in math scores. The average learning loss across all educational systems is approximately 9 points, translating to an average 0.15 percentage points of GDP growth losses globally, equaling $17 trillion of economic loss based on World Bank GDP 2021 data.

These estimates align with other studies predicting earnings losses. Whether these are lower bounds or upper bounds depends on several things. Actions we take to recover, and other losses not yet considered.

Productivity losses build up over time. Online teaching would lower economic costs while learning losses in tertiary education (not considered here) would inflate them. Policies aimed at improving the quality of education and adult training will be needed to offset or, at least, alleviate the impact of the pandemic on human capital.

The losses are not distributed equally.  Those from poorer backgrounds, students already struggling academically, minorities, and immigrants, will suffer more. The result globally will be a greater skill gap between rich and poor countries.

Other impacts include student absenteeism. The success of efforts to reverse learning loss depends in part on students’ regular school attendance. But the rate of chronic absenteeism among public school students grew substantially as students returned to in-person instruction in many countries. In the USA, between the 2018-2019 and 2021-2022 school years, the share of students chronically absent grew by 13.5 percentage points—a 91-percent increase that implies an added 6.5 million students are now chronically absent.

The pandemic shocks disrupt human capital accumulation through work experience, too. In fact, both lost schooling and experience contribute to significant losses in global learning and output. The employment shock is larger for women.

            The school closures also led to changes in parental labor supply in response to the unanticipated closure of schools following the onset of the COVID-19 pandemic. There were significant labor supply reductions. Having a partner at home helped offset the negative effect of school closures, particularly for maternal employment, although respondents’ job traits played a more significant role in shaping labor supply responses to school closures. More worryingly, these early school closures seem to have had a long-lasting negative impact on parental labor supply.

So, why does this matter to all of us? Because when schools close, it’s more than an educational setback; it’s like a hit to the world economy. It shrinks our economic activity, affecting everyone’s pocketbook.

But here’s the silver lining: we have the means to address this. Learning recovery is our remedy, our chance to regain what we have lost. Online tutoring, even during the challenging times of COVID-19, has proven effective. It’s like having a mentor to help us catch up, and the best part – it’s not prohibitively expensive.