The Fiscal and Welfare Effects of Policy Responses to the Covid-19 School Closures

Abstract

Based on data on school visits from Safegraph and on school closures from Burbio, we document that during the Covid-19 crisis secondary schools were closed for in-person learning for longer periods than elementary schools, private schools experienced shorter closures than public schools, and schools in poorer US counties experienced shorter school closures. To quantify the long-run consequences of these school closures, we extend the structural life cycle model of private and public schooling investments by Fuchs-Schündeln et al. (Econ J 132:1647–1683, 2022) to include private school choice and feed into the model the school closure measures from our empirical analysis. Future earnings and welfare losses are largest for children that started public secondary schools at the onset of the Covid-19 crisis. Comparing children from the top to children from the bottom quartile of the income distribution, welfare losses are 0.5 percentage points larger for the poorer children if school closures were unrelated to income. Accounting for the longer school closures in richer counties reduces this gap by about 1/4. A policy intervention that extends schools by 6 weeks generates significant welfare gains for children and raises future tax revenues sufficient to pay for the cost of this schooling expansion.

Shaping Inequality and Intergenerational Persistence of Poverty: Free College or Better Schools

“…Therefore, into the above literature we seek to integrate an explicit modeling of life cycle choices with a production function for human capital at different stages of child development. In this regard, the paper builds on a second recent literature in empirical microeconomics and quantitative macroeconomics that models child skill formation and human capital accumulation endogenously, see, e.g., Cunha et al (2006), Cunha and Heckman (2007), Cunha et al (2010), , Eckstein et al (2019), Daruich (2022), Blandin and Herrington (2022), Bolt et al (2023), Yum (2023), Adamopoulou et al (2024), Bellue and Mahler (2024), and our own work, Fuchs-Schündeln et al (2022) and Fuchs-Schündeln et al (2023), to study the dynamic interactions between parental borrowing constraints and public education spending. 8 On the modeling side we extend this literature by considering the endogenous time allocation choice for both parents between work, leisure and spending time with children of different ages.…”

School closures and effective in-person learning during COVID-19

“…Given the importance of the early stages of schooling for human capital accumulation, it likely contributed to shielding younger children from some of the adverse effects of school closures, compared to their older peers. Indeed, in Fuchs-Schündeln et al (2023) we project that children just starting secondary school during 2019–20 will endure the largest losses in their earnings capacity in the long run.…”

“… 4 See Agostinelli, Doepke, Sorrenti, and Zilibotti (2022) , Fuchs-Schündeln et al (2023) or Jang and Yum (2023) for examples of work on this issue. …”