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

Fuchs-Schündeln, Nicola ; Krüger, Dirk ; Ludwig, Alexander ; Popova, Irina

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URN: urn:nbn:de:bsz:180-madoc-577434
Document Type: Working paper
Year of publication: 2020
The title of a journal, publication series: ZEW Discussion Papers
Volume: 20-045
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: D15 , D31 , E24 , I24,
Keywords (English): Covid-19 , school closures , inequality , intergenerational persistence
Abstract: Using a structural life-cycle model, we quantify the long-term impact of school closuresduring the Corona crisis on children affected at different ages and coming from householdswith different parental characteristics. In the model, public investment through schoolingis combined with parental time and resource investments in the production of child humancapital at different stages in the children’s development process. We quantitatively charac-terize both the long-term earnings consequences on children from a Covid-19 induced lossof schooling, as well as the associated welfare losses. Due to self-productivity in the humancapital production function, skill attainment at a younger stage of the life cycle raises killattainment at later stages, and thus younger children are hurt more by the school closuresthan older children. We find that parental reactions reduce the negative impact of theschool closures, but do not fully offset it. The negative impact of the crisis on children’swelfare is especially severe for those with parents with low educational attainment and lowassets. The school closures themselves are primarily responsible for the negative impactof the Covid-19 shock on the long-run welfare of the children, with the pandemic-inducedincome shock to parents playing a econdary role.

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