Lasting scars: The long term effects of school closures on earnings

By Zsoka Koczan

Almost all countries closed schools and universities during the Covid-19 pandemic, affecting more than 90 per cent of the world’s learners. A growing literature aims to estimate the effects of these school closures on learning outcomes, future earnings and GDP. We contribute to this literature by estimating the impact of school closures on earnings in the long term using a natural experiment. In particular, we estimate the effects of school closures due to the 1999 NATO bombing of Serbia on earnings 20 years later. Our results point to substantial and lasting effects: those in first grade at the time of the shock earn about 6-7 per cent less 20 years after the shock than unaffected cohorts just younger than them. Impacts are larger for those in first grade than those in higher grades and for those in the bottom half of the income distribution. Impacts persist despite affected cohorts staying in school longer, being more likely to work for the public sector and having open-ended contracts.