School Closures and the Future Labor Force

 Remote learning is far from ideal, though as Duke students, our experience is hardly as bad as it actually is for millions trying to learn amidst the pandemic. According to the World Bank, the pandemic has impacted the education of 1.6 billion school children, with school closures and other restrictions severely disrupting normal education. Places with access to technology have shifted to remote learning, but education has ground to a halt in many areas lacking means to build meaningful remote learning. Education is a key factor in productivity, labor supply decisions, and earning, so how will the pandemic's impact on education affect the future labor force? Due to school closures, dropout numbers will rise, productivity will decline, and inequality will worsen.

Students may drop out for many reasons. Some must work to help financially support their family, while others just fall behind and give up on school. The UN Children's Fund calculates that the pandemic will induce 24 million student dropouts. School closures make mandatory education a lot harder to enforce. Attendance holds less weight in remote settings, making falling behind much more likely. Furthermore, distractions at home reduce student attention. Such issues only apply to students who even have the option of remote learning. The UN estimates that 460 million students do not have access to the internet, so remote learning is not even an option. Returns to education are high, so increasing dropouts will worsen inequality and limit these individual's job opportunities. The positive externalities of education, like civic engagement and reduced criminal activity, are also limited. More broadly, the skills of these dropouts will also be stunted by their shortened educations.

Another type of dropout to worry about, according to Richmond Fed President Thomas Barkin, is parents dropping out of the labor force. Because schools closed, many parents had to stop work to take care of their children. Parents oftentimes had to substitute for teachers, creating dissonance between their skills and the demands of the moment; a sales agent is not going to teach their child as well as a full-time teacher. Labor force participation rates of parents are still 6% lower than pre-pandemic levels. If parents do not return to work, they take away with them their human capital, reducing overall skill levels. 

Education of a labor force is highly related to productivity, so disruptions will manifest across years in earning and GDP. A Center for Economic Policy Research study calculated that long-term earnings of a 6 year old would drop 1.2% because of school closures. Welfare gains would decrease by 0.8%. For a 14 year old, the losses would be less severe at 0.8% and 0.5% respectively. Because human capital compounds, school closures will affect young school children the most. This means that their productivity disruptions will not be observed until years later. An OECD survey in Germany also found that daily school-related activity decreased from 7.4 hours to 3.6 hours. They estimate a 1 year loss of education would reduce GDP by 4.3%. School teaches much more than their curriculum; collaborative skills, creativity, and innovation are all fostered. The pandemic's closing of schools will weaken these aspects of school children, leading to long-term losses for the future labor force.

School closures are also widening the gab between races and socioeconomic classes. The Brookings Institution think-tank found student absenteeism in Texas to be 2x higher in Black and Hispanic students compared to White students. Wealthier families can afford resources and tutors, and wealthier schools have the means to create better remote learning experiences. Richer areas are also typically less exposed to Covid-19, so school re-openings are happening quicker in those regions. Educational achievement is highly associated with family income, meaning the pandemic is widening class divides. Covid-19 has peaked unemployment in more low-skill sectors, so reduced job opportunities will disproportionately burden lower-income groups who are stuck with sub-optimal education during this time. 

Sources:

https://www.cnbc.com/2021/03/22/richmond-feds-barkin-on-us-economic-recovery-potential-scarring.html 

https://voxeu.org/article/long-term-effects-school-closures

https://www.oecd.org/education/The-economic-impacts-of-coronavirus-covid-19-learning-losses.pdf

https://www.brookings.edu/blog/up-front/2020/10/01/teen-disengagement-is-on-the-rise/