A sideways look at economics

I approach this second lockdown in higher spirits than the first. Higher, not stronger spirits. Yes, the single malt whisky stocks have been replenished, but so far I have felt no need to resort to the pharmaceutical-grade, 96% ABV Polish hooch that proved so popular during the first lockdown.[1] I could easily spend the rest of this column ranting about the endless missed opportunities that would have spared us a second wave of restrictions. Much as I love a good rant, however, there are plenty of keyboard warriors out there who have emptied this topic of originality. Instead, in the spirit of the forthcoming Thanksgiving celebrations, I want to reflect on aspects that I’m grateful for since the first lockdown.

First of all, I’m thankful for my job. It has been an extremely busy period. I have worked my socks off more often than at any other point in my career. That I have been able to do so is thanks to my extremely talented colleagues, who have put up with some wild mood swings and dubious posts on the work chats. Overall, it has been a privilege to hold a front row seat, to comment and research, and to help with steering clients through an event that will surely enter the history books. It is a testament to this momentous collective effort, that Fathom has also been able to navigate this difficult period pretty well. My chirpier mood is partly a result of all this: standing on solid foundations has helped me frame the changes brought on by the virus as inconveniences rather than life-changing events.

As I was reflecting on this during my week off, my train of thought veered off track when my son squealed ‘Alexaaaaaa, play School’s Out!’. My instinctive reaction was to smile, partly because it was half-term, partly because he had pinpointed the other reason for my happier mood: schools were not going to be out for lockdown! I turned around, lifting my glass and told him: ‘Cheers to that – and good choice! Try Another brick in the wall next.’

I cannot overemphasise how, for households with young children, keeping schools open is the single most important act in preserving a guise of normality during this pandemic. Not only do schools provide a much-needed few hours of relief for parents and an outlet for kids previously starved of social interactions, but they also underpin the basis of a sane household. Schools are the solution to any number of impossible trade-offs posed by the virus. Unless you happen also to be a teacher, it is simply not feasible for two parents working full time to reconcile being educators with properly fulfilling their work duties, without triggering a surge in alcoholism (or worse). Schools have also proven to be disappointingly ill-equipped to deal with remote education. Too often they have preferred to offload as much responsibility as possible onto parents, while conveniently shunning technology on the shaky grounds of social fairness. Not that technology would have been an obvious panacea either. Kids in their early years at primary school (e.g. mine) type at an average speed of one word per hour. Also, credible sources tell me that parental frustration at surprisingly sub-par online schooling platforms may have been behind the surging incidence of damaged laptops in many homes. More gravely, school closures have ended up twisting parent-child relationships. Some parents started to resent their children for the impossible situation they found themselves in. More subtly, children also grew to resent parents for not providing the attention and dedication that they had been accustomed to in normal times. This latter dynamic has been by far the hardest aspect to swallow. I’m truly elated that I don’t have to deal with it this time round.

Keeping school open is not only a personal morale booster, but also good policy. Besides preventing a future surge in addictions and mental health issues among parents, there is an overwhelming body of evidence demonstrating the clear and troubling negative economic impacts from even temporary changes to school access. In Argentina, a paper[2] finds that primary school male and female pupils affected by labour strikes saw their future earnings reduced by 3.2% and 1.9% respectively, as well as suffering higher levels of unemployment and a lower attainment in skills.  Other studies show that forced gaps in education can have important repercussions on inequality. One such paper[3] examines the impacts of a change in the law that forced a delay in students’ enrolment from high school to college by an extra term in certain regions of Colombia. There was a significant drop in college enrolment among the students that had to wait an extra term — particularly for those from more disadvantaged backgrounds, the authors find. The impact on earnings was however more nuanced. Less well-prepared students who failed to attend college because of the legislative break saw little variation in earnings (perhaps because they would have dropped out if they had attended anyway).  More prepared students who failed to attend college, however, suffered permanently lower levels of employment and income when employed.

Another recent publication[4] uses survey data conducted among victims of the 2005 Kashmir earthquake to assess how a traumatic shock may have affected children’s long-term wellbeing. The authors found no lasting impact on school enrolment, even though the earthquake forced schools to remain closed for 14 weeks. However, kids closest to the epicentre attained lower test scores than those further out. Within the group of children closest to the earthquake’s fault line, the authors reported a large and persistent gap in the performance of those from a more disadvantaged background.

Finally, the World Bank produced a report[5] in June containing simulations of the potential long-term impact of the COVID-19 pandemic on learning and school attainment worldwide. It found that the pandemic could result in a drop in the effective years of schooling from 7.9 years to 7.3 years. Without mitigating policy, the World Bank believes that this would be equivalent to a reduction in total work life earnings of $16,000 per pupil. The report also flags the potential for COVID-19 to exacerbate global gender inequalities, with girls being more vulnerable to permanent exclusion from education.

Overall, there is plenty of evidence in support of keeping schools open. Let’s hope that the next time schools become a hot topic, it will not be because the parents are feverishly celebrating their reopening, but instead because the children are cheering their closure at the end of the regular school year. Happy lockdown Friday!


[1] https://www.wsj.com/articles/coronavirus-makes-polish-liquor-fly-off-the-shelves-as-hand-sanitizer-11587147054

[2] https://www.journals.uchicago.edu/doi/abs/10.1086/703134

[3] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3690567

[4] https://riseprogramme.org/publications/human-capital-accumulation-and-disasters-evidence-pakistan-earthquake-2005

[5] https://www.worldbank.org/en/topic/education/publication/simulating-potential-impacts-of-covid-19-school-closures-learning-outcomes-a-set-of-global-estimates