The Long-Term Economic Costs of Lost Schooling

Students who are falling behind now because of Covid restrictions may never catch up in their skills, job prospects and income

By Jon Hilsenrath of The WSJ. Excerpts:

"children lost 116 days of reading time during the early stages of the pandemic last year and 215 days of math work—instruction that will be hard to regain and could leave a whole generation of children struggling to keep up in their studies and testing."

"And the shock has been distributed unevenly. Children in rural areas and areas with large Black and Hispanic populations were hit the hardest."

"Over the next century, the skill shock of 2020 will produce $25 trillion to $30 trillion of lost economic output in today’s dollars, Mr. [Eric] Hanushek estimates, and the lifetime household incomes of the affected students will be 6% to 9% lower."

"In 1966 and 1967, the German government temporarily shortened the school year in a rejiggering of the school calendar. Longitudinal studies, he says, show that this lost class time reduced the incomes of that cohort of students by 5% over their lifetimes."

"In Europe in the 1970s and 1980s, economists Olivier Blanchard and Lawrence Summers noticed that unemployment tended to increase during economic downturns, as expected, but didn’t fully return to previous levels when the economy revived."

"the professors surmised that this was because of structural problems in these markets. Unions tended to fight hard to keep their workers from losing jobs but did little to help them after they were released, making it hard for them to be re-employed. Labor protections encoded in the law had the same effect: Firms were reluctant to rehire after downturns because it was so hard to let go of people in a recession."

"In 2010, nearly half of unemployed workers were without a job for at least six months, an astonishingly high number. In the half-century before the crisis, just one of every eight unemployed workers, on average, went without work for that long.

Mr. Blanchard and other economists worried about the lasting damage to people who sat on the sidelines of the job market and saw their skills deteriorate. Some stopped looking for work; others found income on federal disability rolls. As the expansion marched on, however, some were drawn back into the labor market. Mr. Blanchard, to his surprise, found evidence of hysteresis less compelling than he had expected."