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The long-term distributional and welfare effects of Covid-19 school closures

Nicola Fuchs-Schündeln, Dirk Krueger, Alexander Ludwig () and Irina Popova

No 37/21, ICIR Working Paper Series from Goethe University Frankfurt, International Center for Insurance Regulation (ICIR)

Abstract: Using a structural life-cycle model, we quantify the heterogeneous impact of school closures during the Corona crisis on children affected at different ages and coming from households with different parental characteristics. In the model, public investment through schooling is combined with parental time and resource investments in the production of child human capital at different stages in the children's development process. We quantitatively characterize the long-term consequences from a Covid-19 induced loss of schooling, and find average losses in the present discounted value of lifetime earnings of the affected children of close to 1%, as well as welfare losses equivalent to about 0:6% of permanent consumption. Due to self-productivity in the human capital production function, skill attainment at a younger stage of the life cycle raises skill attainment at later stages, and thus younger children are hurt more by the school closures than older children. We find that parental reactions reduce the negative impact of the school closures, but do not fully offset it. The negative impact of the crisis on children's welfare is especially severe for those with parents with low educational attainment and low assets. The school closures themselves are primarily responsible for the negative impact of the Covid-19 shock on the long-run welfare of the children, with the pandemic-induced income shock to parents playing a secondary role.

Keywords: Covid-19; school closures; inequality; intergenerational persistence (search for similar items in EconPapers)
JEL-codes: D15 D31 E24 I24 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (7) Track citations by RSS feed

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https://www.econstor.eu/bitstream/10419/234522/1/175917226X.pdf (application/pdf)

Related works:
Journal Article: The Long-Term Distributional and Welfare Effects of Covid-19 School Closures (2022) Downloads
Working Paper: The Long-Term Distributional and Welfare Effects of Covid-19 School Closures (2020) Downloads
Working Paper: The Long-Term Distributional and Welfare Effects of COVID-19 School Closures (2020) Downloads
Working Paper: The Long-Term Distributional and Welfare Effects of Covid-19 School Closures (2020) Downloads
Working Paper: The Long-Term Distributional and Welfare E?ects of Covid-19 School Closures (2020) Downloads
Working Paper: The long-term distributional and welfare effects of Covid-19 school closures (2020) Downloads
Working Paper: The long-term distributional and welfare effects of Covid-19 school closures (2020) Downloads
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