Brazil will have poorer generation with school closures in the pandemic, says IMF

Over the next few decades, Brazilians will experience one of the biggest income losses among major global economies due to school closures in the pandemic.

According to estimates by the IMF (International Monetary Fund), incomplete learning during the health crisis, if not remedied, can reduce the average income of this generation of students by 9.1% over their lifetime.

The prognosis places Brazil in the third worst position among the G20 countries, behind only Indonesia — where the loss is estimated at 9.7% — and Mexico, which leads the ranking with 9.9%.

The report, released this Tuesday (17), highlights that the impact of the pandemic on education is unprecedented and that the effects on the economy, inequality and income of the population could be felt for a long time.

In the years 2020 and 2021 alone, school disruptions affected 1.6 billion students worldwide. Although they reached all the G20 countries, the learning losses fell disproportionately on emerging countries, with even more serious consequences for vulnerable populations.

“If not addressed, the resulting impact on human capital will reduce skill levels and aggregate output over the next few decades — with greater inequality,” the document says.

The report recalls that school closures have already had measurable effects on students. According to the IMF, several G20 economies have seen a drop in results in performance tests, not to mention the considerable decrease in enrollments at all levels of education and the risks of dropout.

Demographic projections indicate that the affected student generation will represent up to 40% of the working age population in the G20 economies in the coming decades. With lower qualifications, the perspective is that the average income of workers will also be lower — unless the damage is mitigated by public actions, as the IMF points out.

Decreasing skill levels, for example, can inflate the informal labor market. And with the poorest families suffering the greatest learning losses, inequality tends to increase.

However, the impacts on workers’ income may be underestimated. According to the IMF, estimates do not consider secondary effects, such as a reduction in the supply of jobs, as widespread disruptions in education reduce the skill level in the economy and can wither long-term growth.

For Naercio Menezes Filho, a professor at Insper, the IMF projections show what was already expected. In his view, Brazil appears in a more unfavorable position because it closed its schools for a longer period of time.

The economist also recalls that the pay differential associated with education is very high in Brazil. According to him, in few countries in the world there is such a strong link between higher education and good wages as there is here.

“A person can only have a big increase in income in Brazil if they complete higher education — and that will decrease in the long run”, he says. “If these kids don’t learn to read, write and do math quickly, they won’t get there. So it’s a huge impact,” she adds.

In his view, the economic impact of school closures is not restricted to the students who are affected. Even those who managed to continue with their studies may be affected, as the productivity of the economy will be impacted.

However, the main factor, he says, is the increase in the number of people who will come to depend on government assistance programs.

“Where will the money from Auxílio Brasil and Benefício de Prestação Continuada for more people come from? From taxes that come out of the pockets of the richest”, he says. “Even though [o problema] does not directly affect people who are in private schools, indirectly there will be an increase in the tax burden.”

For Guilherme Lichand, professor of welfare economics and child development at the University of Zurich, the report is even kind to what could happen to Brazil.

One of the reasons, according to him, is that the document does not consider school dropout. “We can’t see that reflected there, because it’s more than a loss of learning: it’s a break in the trajectory”, he says. “The situation is more critical than the report indicates”, he amends.

The researcher points out that the Fund’s estimate is counterfactual, that is, it does not mean that income will fall by 9% compared to what it is now. Yields, in fact, may even rise, but they will grow less than in the absence of this phenomenon.

“We were downgraded in relation to the possible future. The question that remains is: what to do to get closer to what could have been”, he says.

In this regard, Lichand is optimistic and mentions some “escape routes”. One is to prioritize the fundamental skills that students should have learned and did not learn during the health crisis. Another possibility is after-school tutoring based on student performance, as well as cash transfer programs to encourage permanence in school.

“To say that this is a lost generation is not good, because it is not true. We just need to make the right political choices to help rebuild the future of these generations”, he says.