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May 21, 2021

Lack of education to intensify global inequality – leading macroeconomic influencers

School-age minors have been gravely impacted by the Covid-19 pandemic, with approximately 1.5bn students being denied learning in physical classrooms since March 2020.

Economists believe that the lack of education could aggravate global inequality, with the students in low- and middle-income countries struggling to study new skills as quickly as students in richer countries.

Dany Bahar

Dany Bahar, an economist and senior fellow at Brookings Institution’s global economy and development programme, shared an article on how the coronavirus pandemic has increased the learning gap between students from rich and poor countries. According to World Bank indicators, 53% of ten-year-olds in low- and middle-income countries either did not read well enough to understand basic texts or simply remained out of school. However, this figure is expected to jump ten percentage points higher in one year because of the global pandemic.

According to research, learning losses caused by school closures during the Covid-19 crisis is expected to cost low-income countries 62% of their GDP but middle- and high-income countries just 22% and 9% respectively.

Additionally, experts stated that children lacking education have reduced earnings prospects, compared to those who received high-quality education, and this inevitably leads to a country’s slow economic growth. As a result, policymakers of low- and middle-income countries should focus on reversing the damage caused by the pandemic and prioritise re-opening of public schools.

Miles Corak

Miles Corak, a professor of economics and senior scholar at the Stone Center on Socio-economic inequality at the City University of New York (CUNY), retweeted on the labour shortages myth in the US. He stated that it is worth recognising that sectors worst hit by the pandemic, and where labour shortage cries are the loudest, are the ones that unions have struggled to organise and where wages are lowest.

Economists believe that capitalist countries such as the US can deal with shortages more easily compared to a communist system, by raising the wages of workers. Consequently, more workers will enter the job market.

Experts believe that the noise around labour shortages can be due to the fact that many Americans dropped out because of virus fears, leading to some high-skilled industries suffering from a lack of qualified workers or small businesses not being able to pay high wages, as well as the emerging debate around unemployment benefits discouraging the participation of workers in the workforce. All these factors combined together with a rebounding economy has created an image of alabour shortage, which experts believe can be solved with companies paying more wages to their workers.

Edward Stringham

Edward Stringham, an economist and president of the American Institute for Economic Research, shared an article on initial claims for Covid unemployment benefits dropping to 444,000 for the week ending 15 May, a decrease of 34,000 from the previous week’s that suggested a quicker economic recovery and a strengthening US labour market.

Data further revealed that the four-week average fell 30,500 to 504,750, which is also the sixth successive week below 700,000 and the sixth uninterrupted decline. Economists believe that initial claims will remain low due to accelerated vaccinations and gradual easing of restrictions that will push the economy towards pre-pandemic levels of activity.

 

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