IDEAS home Printed from https://ideas.repec.org/p/hka/wpaper/2020-062.html
   My bibliography  Save this paper

The Long-Term Distributional and Welfare Effects of COVID-19 School Closures

Author

Listed:
  • Nicola Fuchs-Schündeln

    (Goethe University Frankfurt)

  • Dirk Krueger

    (University of Pennsylvania)

  • Alexander Ludwig

    (SAFE, University of Mannheim)

  • Irina Popova

    (Goethe University Frankfurt)

Abstract

Using a structural life-cycle model, we quantify the long-term 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 both the long-term earnings consequences on children from a Covid-19 induced loss of schooling, as well as the associated welfare losses. 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.

Suggested Citation

  • Nicola Fuchs-Schündeln & Dirk Krueger & Alexander Ludwig & Irina Popova, 2020. "The Long-Term Distributional and Welfare Effects of COVID-19 School Closures," Working Papers 2020-062, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2020-062
    Note: M
    as

    Download full text from publisher

    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Fuchs-Schundeln_Krueger_Ludwig_etal_2020_effects-COVID-school-closures.pdf
    File Function: First version, August 26, 2020
    Download Restriction: no

    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Fuchs-Schundeln_Krueger_Ludwig_etal_2020_effects-COVID-school-closures_rev1.pdf
    File Function: Second version, August 27, 2020
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2013. "Education Policy�and Intergenerational Transfers in Equilibrium," Cowles Foundation Discussion Papers 1887, Cowles Foundation for Research in Economics, Yale University.
    2. Mikael Lindahl & Alan B. Krueger, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December.
    3. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    4. repec:hrv:hksfac:34298862 is not listed on IDEAS
    5. Fitzpatrick, Maria D. & Grissmer, David & Hastedt, Sarah, 2011. "What a difference a day makes: Estimating daily learning gains during kindergarten and first grade using a natural experiment," Economics of Education Review, Elsevier, vol. 30(2), pages 269-279, April.
    6. Kalena E. Cortes & Joshua S. Goodman & Takako Nomi, 2015. "Intensive Math Instruction and Educational Attainment: Long-Run Impacts of Double-Dose Algebra," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 108-158.
    7. Mendoza, Enrique G. & Razin, Assaf & Tesar, Linda L., 1994. "Effective tax rates in macroeconomics: Cross-country estimates of tax rates on factor incomes and consumption," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 297-323, December.
    8. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2017. "Optimal Tax Progressivity: An Analytical Framework," The Quarterly Journal of Economics, Oxford University Press, vol. 132(4), pages 1693-1754.
    9. Diego Restuccia & Carlos Urrutia, 2004. "Intergenerational Persistence of Earnings: The Role of Early and College Education," American Economic Review, American Economic Association, vol. 94(5), pages 1354-1378, December.
    10. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2019. "Education Policy and Intergenerational Transfers in Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 127(6), pages 2569-2624.
    11. Tomoaki Kotera & Ananth Seshadri, 2017. "Educational Policy and Intergenerational Policy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 187-207, April.
    12. David Jaume & Alexander Willén, 2019. "The Long-Run Effects of Teacher Strikes: Evidence from Argentina," Journal of Labor Economics, University of Chicago Press, vol. 37(4), pages 1097-1139.
    13. Diego Daruich, 2018. "The Macroeconomic Consequences of Early Childhood Development Policies," Working Papers 2018-29, Federal Reserve Bank of St. Louis.
    14. Adams-Prassl, Abi & Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2020. "Inequality in the impact of the coronavirus shock: Evidence from real time surveys," Journal of Public Economics, Elsevier, vol. 189(C).
    15. Hertz Tom & Jayasundera Tamara & Piraino Patrizio & Selcuk Sibel & Smith Nicole & Verashchagina Alina, 2008. "The Inheritance of Educational Inequality: International Comparisons and Fifty-Year Trends," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-48, January.
    16. Elizabeth M. Caucutt & Lance Lochner, 2020. "Early and Late Human Capital Investments, Borrowing Constraints, and the Family," Journal of Political Economy, University of Chicago Press, vol. 128(3), pages 1065-1147.
    17. Steven G. Rivkin & Jeffrey C. Schiman, 2015. "Instruction Time, Classroom Quality, and Academic Achievement," Economic Journal, Royal Economic Society, vol. 125(588), pages 425-448, November.
    18. William G. Gale & John Karl Scholz, 1994. "Intergenerational Transfers and the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 145-160, Fall.
    19. Yum, Minchul, 2016. "Parental time investment and intergenerational mobility," Working Papers 16-06, University of Mannheim, Department of Economics.
    20. Busch, Christopher & Ludwig, Alexander, 2020. "Higher-Order Income Risk over the Business Cycle," CEPR Discussion Papers 14538, C.E.P.R. Discussion Papers.
    21. Victor Lavy, 2015. "Do Differences in Schools' Instruction Time Explain International Achievement Gaps? Evidence from Developed and Developing Countries," Economic Journal, Royal Economic Society, vol. 125(588), pages 397-424, November.
    22. Adams-Prassl, A. & Boneva, T. & Golin, M & Rauh, C., 2020. "Inequality in the Impact of the Coronavirus Shock: New Survey Evidence for the UK," Cambridge Working Papers in Economics 2023, Faculty of Economics, University of Cambridge.
    23. Agostinelli, Francesco & Doepke, Matthias & Sorrenti, Giuseppe & Zilibotti, Fabrizio, 2022. "When the great equalizer shuts down: Schools, peers, and parents in pandemic times," Journal of Public Economics, Elsevier, vol. 206(C).
    24. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    25. Krueger, Dirk & Ludwig, Alexander, 2016. "On the optimal provision of social insurance: Progressive taxation versus education subsidies in general equilibrium," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 72-98.
    26. Titan Alon & Matthias Doepke & Jane Olmstead-Rumsey & Michèle Tertilt, 2020. "The Impact of COVID-19 on Gender Equality," CRC TR 224 Discussion Paper Series crctr224_2020_163, University of Bonn and University of Mannheim, Germany.
    27. Jörn-Steffen Pischke, 2007. "The Impact of Length of the School Year on Student Performance and Earnings: Evidence From the German Short School Years," Economic Journal, Royal Economic Society, vol. 117(523), pages 1216-1242, October.
    28. Roland Benabou, 2002. "Tax and Education Policy in a Heterogeneous-Agent Economy: What Levels of Redistribution Maximize Growth and Efficiency?," Econometrica, Econometric Society, vol. 70(2), pages 481-517, March.
    29. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.
    30. Steven G. Rivkin & Jeffrey C. Schiman, 2015. "Instruction Time, Classroom Quality, and Academic Achievement," Economic Journal, Royal Economic Society, vol. 0(588), pages 425-448, November.
    31. Hans A. Holter, 2015. "Accounting for cross‐country differences in intergenerational earnings persistence: The impact of taxation and public education expenditure," Quantitative Economics, Econometric Society, vol. 6(2), pages 385-428, July.
    32. Magnus Carlsson & Gordon B. Dahl & Björn Öckert & Dan-Olof Rooth, 2015. "The Effect of Schooling on Cognitive Skills," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 533-547, July.
    33. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 12, pages 697-812, Elsevier.
    34. Elizabeth Caucutt & Lance Lochner & Joseph Mullins & Youngmin Park, 2020. "Child Skill Production: Accounting for Parental and Market-Based Time and Goods Investments," Staff Working Papers 20-36, Bank of Canada.
    35. Christopher Busch & David Domeij & Fatih Guvenen & Rocio Madera, 2022. "Skewed Idiosyncratic Income Risk over the Business Cycle: Sources and Insurance," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(2), pages 207-242, April.
    36. Bacher-Hicks, Andrew & Goodman, Joshua & Mulhern, Christine, 2021. "Inequality in household adaptation to schooling shocks: Covid-induced online learning engagement in real time," Journal of Public Economics, Elsevier, vol. 193(C).
    37. Per Engzell & Arun Frey & Mark D. Verhagen, 2021. "Learning loss due to school closures during the COVID-19 pandemic," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 118(17), pages 2022376118-, April.
    38. Sang Yoon (Tim) Lee & Ananth Seshadri, 2019. "On the Intergenerational Transmission of Economic Status," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 855-921.
    39. Jang, Youngsoo & Yum, Minchul, 2020. "Aggregate and Intergenerational Implications of School Closures: A Quantitative Assessment," MPRA Paper 107593, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guido Neidhöfer & Nora Lustig & Mariano Tommasi, 2021. "Intergenerational transmission of lockdown consequences: prognosis of the longer-run persistence of COVID-19 in Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 571-598, September.
    2. John G. Fernald & Huiyu Li, 2022. "The Impact of COVID on Productivity and Potential Output," Working Paper Series 2022-19, Federal Reserve Bank of San Francisco.
    3. Emanuele Amodio & Michele Battisti & Antonio Francesco Gravina & Andrea Mario Lavezzi & Giuseppe Maggio, 2022. "School-age Vaccination, School Openings and Covid-19 diffusion," Papers 2203.12331, arXiv.org.
    4. Nicola Fuchs-Schündeln, 2022. "Covid-Induced School Closures in the US and Germany: Long-Term Distributional Effects," CESifo Working Paper Series 9698, CESifo.
    5. Glover, Andrew & Heathcote, Jonathan & Krueger, Dirk, 2022. "Optimal age-Based vaccination and economic mitigation policies for the second phase of the covid-19 pandemic," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    6. Khan, Muhammad Jehangir & Ahmed, Junaid, 2021. "Child education in the time of pandemic: Learning loss and dropout," Children and Youth Services Review, Elsevier, vol. 127(C).
    7. Fuchs-Schündeln, Nicola & Krueger, Dirk & Kurmann, Andre & Lale, Etienne & Ludwig, Alexander & Popova, Irina, 2021. "The Fiscal and Welfare Effects of Policy Responses to the Covid-19 School Closures," CEPR Discussion Papers 16663, C.E.P.R. Discussion Papers.
    8. Youngsoo Jang & Minchul Yum, 2020. "Aggregate and Intergenerational Implications of School Closures: A Quantitative Assessment," CRC TR 224 Discussion Paper Series crctr224_2020_234v2, University of Bonn and University of Mannheim, Germany.
    9. Sakouvogui Kekoura & Guilavogui Mama Genevieve, 2022. "How are the United States Banks faring during the COVID-19 Pandemic? Evidence of Economic Efficiency Measures," Open Economics, De Gruyter, vol. 5(1), pages 11-29, January.
    10. Michele Battisti & Giuseppe Maggio, 2022. "Will the last be the first? School closures and educational outcomes," Working Paper series 22-10, Rimini Centre for Economic Analysis.
    11. Belmonte, A & Pickard, H, 2022. "Safe at Last? LATE Effects of a Mass Immunization Campaign on Households’ Economic Insecurity," CAGE Online Working Paper Series 604, Competitive Advantage in the Global Economy (CAGE).
    12. Svaleryd, Helena & Vlachos, Jonas, 2022. "COVID-19 and School Closures," GLO Discussion Paper Series 1008, Global Labor Organization (GLO).
    13. Blaskó, Zsuzsa & da Costa, Patricia & Schnepf, Sylke V., 2021. "Learning Loss and Educational Inequalities in Europe: Mapping the Potential Consequences of the COVID-19 Crisis," IZA Discussion Papers 14298, Institute of Labor Economics (IZA).
    14. Isphording, Ingo E. & Lipfert, Marc & Pestel, Nico, 2021. "Does re-opening schools contribute to the spread of SARS-CoV-2? Evidence from staggered summer breaks in Germany," Journal of Public Economics, Elsevier, vol. 198(C).
    15. Agostinelli, Francesco & Doepke, Matthias & Sorrenti, Giuseppe & Zilibotti, Fabrizio, 2022. "When the great equalizer shuts down: Schools, peers, and parents in pandemic times," Journal of Public Economics, Elsevier, vol. 206(C).
    16. Burlinson, Andrew & Giulietti, Monica & Law, Cherry & Liu, Hui-Hsuan, 2021. "Fuel poverty and financial distress," Energy Economics, Elsevier, vol. 102(C).
    17. Ronja Demel & Francesco Grassi & Yasaman Rafiee & Michael R. Waldmann & Annekathrin Schacht, 2022. "How German and Italian Laypeople Reason about Distributive Shortages during COVID-19," IJERPH, MDPI, vol. 19(19), pages 1-18, September.
    18. Stefanie Stantcheva, 2022. "Inequalities in the Times of a Pandemic," NBER Working Papers 29657, National Bureau of Economic Research, Inc.
    19. Kai Fischer & J. James Reade & W. Benedikt Schmal, 2021. "The Long Shadow of an Infection: COVID-19 and Performance at Work," Economics Discussion Papers em-dp2021-17, Department of Economics, University of Reading.
    20. Julia Bock-Schappelwein & Ulrike Famira-Mühlberger, 2020. "Ökonomische Folgen von Schulschließungen," WIFO Research Briefs 18, WIFO.
    21. Drewek, Peter, 2020. "Bildungsdefizite coronabedingter Schulschließungen? Eine bildungshistorische Analyse," ZEW Discussion Papers 20-073, ZEW - Leibniz Centre for European Economic Research.
    22. Santiago Tobón Zapata & Nathalie Alvarado & Ervyn Norza & Santiago M. Perez-Vincent & Martín Vanegas-Arias, 2021. "The Evolution of Citizen Security in Colombia in Times of COVID-19," Documentos de Trabajo CIEF 019673, Universidad EAFIT.
    23. OIKAWA Masato & TANAKA Ryuichi & BESSHO Shun-ichiro & KAWAMURA Akira & NOGUCHI Haruko, 2022. "Do Class Closures Affect Students' Achievements? Heterogeneous effects of students' socioeconomic backgrounds," Discussion papers 22042, Research Institute of Economy, Trade and Industry (RIETI).
    24. Isphording, Ingo E. & Lipfert, Marc & Pestel, Nico, 2020. "School Re-Openings after Summer Breaks in Germany Did Not Increase SARS-CoV-2 Cases," IZA Discussion Papers 13790, Institute of Labor Economics (IZA).
    25. John G. Fernald & Huiyu Li, 2021. "The Impact of COVID on Potential Output," Working Paper Series 2021-09, Federal Reserve Bank of San Francisco.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fuchs-Schündeln, Nicola & Krueger, Dirk & Kurmann, Andre & Lale, Etienne & Ludwig, Alexander & Popova, Irina, 2021. "The Fiscal and Welfare Effects of Policy Responses to the Covid-19 School Closures," CEPR Discussion Papers 16663, C.E.P.R. Discussion Papers.
    2. Youngsoo Jang & Minchul Yum, 2020. "Aggregate and Intergenerational Implications of School Closures: A Quantitative Assessment," CRC TR 224 Discussion Paper Series crctr224_2020_234v1, University of Bonn and University of Mannheim, Germany.
    3. Diego Daruich & Julian Kozlowski, 2020. "Explaining Intergenerational Mobility: The Role of Fertility and Family Transfers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 36, pages 220-245, April.
    4. Yum, Minchul, 2016. "Parental time investment and intergenerational mobility," Working Papers 16-06, University of Mannheim, Department of Economics.
    5. Iacopo Morchio, 2022. "Policies for Early Childhood Skills Formation: Accounting for Parental Choices and Noncognitive Skills," Bristol Economics Discussion Papers 22/755, School of Economics, University of Bristol, UK.
    6. Krueger, Dirk & Ludwig, Alexander, 2016. "On the optimal provision of social insurance: Progressive taxation versus education subsidies in general equilibrium," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 72-98.
    7. Krueger, Dirk & Ludwig, Alexander, 2013. "On the Optimal Provision of Social Insurance," MEA discussion paper series 201302, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    8. Jo Blanden & Matthias Doepke & Jan Stuhler, 2022. "Education inequality," CEP Discussion Papers dp1849, Centre for Economic Performance, LSE.
    9. Diego Daruich, 2018. "The Macroeconomic Consequences of Early Childhood Development Policies," Working Papers 2018-29, Federal Reserve Bank of St. Louis.
    10. Huebener, Mathias & Kuger, Susanne & Marcus, Jan, 2017. "Increased instruction hours and the widening gap in student performance," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 15-34.
    11. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2019. "Education Policy and Intergenerational Transfers in Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 127(6), pages 2569-2624.
    12. Guido Neidhöfer & Nora Lustig & Mariano Tommasi, 2021. "Intergenerational transmission of lockdown consequences: prognosis of the longer-run persistence of COVID-19 in Latin America," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(3), pages 571-598, September.
    13. Rauh, Christopher, 2017. "Voting, education, and the Great Gatsby Curve," Journal of Public Economics, Elsevier, vol. 146(C), pages 1-14.
    14. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2013. "Education Policy�and Intergenerational Transfers in Equilibrium," Cowles Foundation Discussion Papers 1887, Cowles Foundation for Research in Economics, Yale University.
    15. Alexander Ludwig & Dirk Krueger, 2015. "Optimal Capital and Progressive Labor Income Taxation with Endogenous Schooling Decisions and Intergenerational Transfers," 2015 Meeting Papers 334, Society for Economic Dynamics.
    16. Emily Moschini, 2019. "Child Care Subsidies with One- and Two-Parent Families," 2019 Meeting Papers 42, Society for Economic Dynamics.
    17. Brant Abbott, 2022. "Incomplete Markets and Parental Investments in Children," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 104-124, April.
    18. Brotherhood, Luiz & Delalibera, Bruno R., 2020. "Minding the gap between schools and universities," Journal of Economic Dynamics and Control, Elsevier, vol. 120(C).
    19. Winfried Koeniger & Julien Prat, 2018. "Human Capital and Optimal Redistribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 27, pages 1-26, January.
    20. Winfried Koeniger & Julien Prat, 2018. "Human Capital and Optimal Redistribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 27, pages 1-26, January.

    More about this item

    Keywords

    COVID-19; school closures; Inequality; intergenerational persistence;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hka:wpaper:2020-062. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/mfichus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jennifer Pachon (email available below). General contact details of provider: https://edirc.repec.org/data/mfichus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.