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

69 Pages Posted: 7 Feb 2022

See all articles by Admin SSRN au/at CIRANO

Admin SSRN au/at CIRANO

CIRANO

Nicola Fuchs-Schündeln

Goethe University Frankfurt

Dirk Krueger

University of Pennsylvania; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Goethe University Frankfurt; Netspar

Andre Kurmann

Drexel University

Etienne Lalé

York University - Faculty of Liberal Arts & Professional Studies; CIRANO; IZA

Irina Popova

Goethe University Frankfurt

Alexander Ludwig

Goethe University Frankfurt

Multiple version iconThere are 3 versions of this paper

Date Written: November 12, 2021

Abstract

Using a structural life-cycle model and data on school visits from Safegraph and school closures from Burbio, we quantify the heterogeneous impact of school closures during the Corona crisis on children affected at different ages and coming from households with different parental characteristics. Our data suggests that secondary schools were closed for in-person learning for longer periods than elementary schools (implying that younger children experienced less school closures than older children), and that private schools experienced shorter closures than public schools, and schools in poorer U.S. counties experienced shorter school closures. We then extend the structural life cycle model of private and public schooling investments studied in Fuchs-Schündeln, Krueger, Ludwig, and Popova (2021) to include the choice of parents whether to send their children to private schools, empirically discipline it with data on parental investments from the PSID, and then feed into the model the school closure measures from our empirical analysis to quantify the long-run consequences of the COVID-19 school closures on the cohorts of children currently in school. 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 topto children from the bottom quartile of the income distribution, welfare losses are ca. 0.8 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 1/3. A policy intervention that extends schools by 3 months (6 weeks in the next two summers) generates signicant welfare gains for the children and raises future tax revenues approximately sufficient to pay for the cost of this schooling expansion.

Keywords: COVID-19, school closures, inequality, intergenerational persistence

JEL Classification: D15, D31, E24, I24

Suggested Citation

SSRN au/at CIRANO, Admin and Fuchs-Schündeln, Nicola and Krueger, Dirk and Kurmann, Andre and Lalé, Etienne and Popova, Irina and Ludwig, Alexander, The Fiscal and Welfare Effects of Policy Responses to the COVID-19 School Closures (November 12, 2021). Available at SSRN: https://ssrn.com/abstract=4026607 or http://dx.doi.org/10.2139/ssrn.4026607

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Nicola Fuchs-Schündeln

Goethe University Frankfurt ( email )

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Dirk Krueger

University of Pennsylvania ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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Andre Kurmann

Drexel University ( email )

School of Economics
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Etienne Lalé

York University - Faculty of Liberal Arts & Professional Studies ( email )

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Irina Popova

Goethe University Frankfurt ( email )

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Alexander Ludwig

Goethe University Frankfurt

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Frankfurt am Main, 60323
Germany

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