Costs of school closure in the face of COVID-19

The COVID-19 pandemic has led to numerous policy responses, some of which are directed at the education sector such as school closings. This analysis estimates the predicted costs of maintaining current policies in the Norwegian education system. Specifically, we estimate the cost of keeping all education institutions closed, with all teaching given through online platforms.

We aim at estimating costs for all levels of the education system, that is from kindergartens through higher education institutions. We also provide estimates on the indirect cost school closings have on parental labor supply and productivity.

This exercise is very demanding as there are many unknown factors that are unlikely to ever be identified, including which workers that can work from home, and how good a substitute online teaching really is for students of different ages and across schools. In addition, there are several factors for which no data currently exist, including which parents that have become unemployed due to the economic consequences ensuing from the pandemic. Combined, these issues cause us to rely on a set of untestable assumptions. To avoid overestimating the costs we have consistently implemented conservative assumptions whenever possible. It is therefore likely that the real costs are larger than our estimates.

The report has three main parts. In the first part we discuss relevant academic literature and the assumptions we employ based on the literature. We proceed to show our estimates of economic costs of delayed student progression in higher education and lost learning in kindergarten through upper secondary school. Our estimates sum to a total of NOK 2.2 billion for higher delayed progression for a small share of students assuming higher education institutions remain closed. The value of lost lifetime income due to reduced human capital and reduced parental labor supply is estimated to NOK 1.7 billion each day schools remain closed. A total of NOK 77.7 billion will be lost if schools and kindergartens remain closed for the remainder of the school year.