New Paper Quantifies the Cost to Economies of Out-of-School Children

April 29, 2013   |   Cote D'Ivoire, Democratic Republic of Congo, India, Mali, Pakistan, Yemen

Despite significant progress toward ensuring that children worldwide have access to quality primary education, out-of-school children remain a pervasive global problem. According to one estimate (UNESCO Institute for Statistics), there are as many as 61 million of these children in the world. The economic and social benefits associated with primary education are well known; now, a new set of estimates for the economic costs of not achieving universal primary education are available.

Released in Qatar among an audience of education ministers and other education leaders, a new paper from the Results for Development (R4D), “A Moral Obligation, An Economic Priority: The Urgency of Enrolling Out-of-School Children,” investigates the economic costs that six countries bear due to their significant populations of out-of-school children. In addition, the paper reviews the latest literature on the benefits of primary education.

With funding from Sheikha Moza bint Nasser’s Educate A Child initiative, the paper’s authors use two economic methods to estimate the cost of out-of-school children in six countries where the problem is still prevalent: Cote d’Ivoire, Democratic Republic of Congo, India, Mali, Pakistan, and Yemen. The countries were chosen for geographic variety and data availability.

The first method uses labor market data to estimate the total earnings that will be lost in the near future due to young, undereducated workers. Essentially, if today’s out-of-school children do not complete primary education before entering the labor force, their collective future earnings will be less than if they went to school. How much is forfeited depends on the country. In India, which has made great strides in addressing its out-of-school population, the cost is 0.1 percent of GDP. Contrast that with Cote d’Ivoire, where nearly 3 out of 10 children are not expected to complete primary education. It is estimated that if it does not make significant progress toward achieving universal primary education, Cote d’Ivoire will face an income gap equivalent to approximately 7 percent of its GDP when today’s out-of-school children start working. To put this in perspective, in 2008 Cote d’Ivoire invested 0.91 percent of its GDP in health and 4.6 percent in education. With an additional 7 percent of GDP, the country could more than double its annual education and health spending.

The second approach uses a macroeconomic model to project how much higher each country’s economic output would be today if its entire cohort of workers had completed primary school. The loss estimates here are even more dramatic. In Yemen, for instance, where the average worker completes less than 4 years of education, a 38.4 percent income gap is attributable to the out-of-school children of past generations. This second exercise underscores the vast economic returns that could be accrued by investing in remedial education programs for illiterate adults.

R4D Managing Director and report co-author Nicholas Burnett notes that “For the first time, government leaders have the methodology to quantify the consequences of not addressing their populations of out-of-school children. With this data, they can make informed decisions around the crucial issue of where to best invest public spending for long-term growth and development.”

Please click here to read the full paper.

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