School closures due to the Corona pandemic can have long-term consequences, especially for the welfare of children between the ages of six and ten. If schools are closed down for six months, the performance of the children’s human capital accumulation and educational attainment suffers. Thus, these children have to cope with lower earning opportunities in their professional life later. This consequence affects above all children from households with lower incomes. These are the results of a current SAFE Working Paper by the Leibniz Institute for Financial Research SAFE.
"Since older children have already achieved a certain level of education, the later loss of earnings is not quite as significant as for younger ones. At the same time, families with lower incomes are comparatively more dependent on educational investments payed for by the government," explains SAFE Fellow Alexander Ludwig, one of the authors of the research paper. According to the results, children earn on average about one percent less later than they would have if a constant level of education had been provided.
Parents can only partially compensate for school closures
Together with international co-authors, Ludwig designed a model calculation for the SAFE Working Paper based on existing literature and microdata of US-American households. The simulation shows the economic losses for children and their families if schools are closed due to the corona crisis and the state's educational mandate can no longer be fully guaranteed.
"School closures are very expensive in many ways," says Ludwig. According to the calculations, parents have to invest an average of around five percent more financially and a good three percent more time in bringing up their children.
The results of the modelled calculation further show that the parents of the children affected can compensate for the negative impact of school closures in part but not completely. In this regard, the parents' loss of income due to the corona pandemic plays only a secondary role. "The school closures themselves are primarily responsible for the negative consequences of the Covid-19 shock on the long-term welfare of the children," Ludwig says.
Prof. Dr. Alexander Ludwig
SAFE Fellow in the research department Macro Finance
Phone: +49 69 798 30036