Exclusion from Education: The Economic Cost of Out of School Children in 20 Countries

This report reviews the benefits of primary education and estimates the economic cost associated with large populations of out of school children. It uses economic cost estimates to reflect the latest data, at that time, from the UNESCO Institute for Statistics (UIS) for a set of 20 low- and middle-income countries.

According to UNESCO estimates, there are at least 57 million out of school children (OOSC) of primary-school age in the world (UIS 2013). To underscore the importance of reducing the global number of out of school children, this paper uses two methods to estimate the economic loss associated with OOSC. The first estimation approach

uses labour market data to estimate the total earnings that will be forfeited in the near future due to undereducated workers if primary school enrolment patterns do not change. The second approach is based on cross-country regressions that estimate the relationship between national education attainment and per capita income.

The estimated economic costs of OOSC vary substantially with OOSC prevalence rates across the sample, from 1% of GDP in Thailand to 10% of GDP in Gambia. Because these estimates do not account for the non-income benefits of primary education (such as improved health and citizenship), they are likely lower bounds for the total cost of OOSC in each country. This report reveals that for nine countries with high OOSC prevalence, the economic benefit associated with achieving universal primary education exceeds multiple years of economic growth. In Mali and Nigeria, for example, the projected cost of OOSC is worth over two years of average GDP growth.

The economic cost of OOSC tends to be highest in countries that have experienced slow growth over the past decade, suggesting that enrolling out of school children and providing them with quality education could contribute to global economic convergence, reducing economic inequality between and within countries. Furthermore, for all countries in the sample (even those with low OOSC prevalence, like Brazil and Indonesia), the estimated economic gain from achieving universal primary education exceeds the estimated increase in public spending required enrolling those OOSC in primary school. Thus there are strong equity and efficiency arguments in favour of endowing OOSC with quality primary education.

Taken together, the findings of this report should provide impetus for efforts to reach out of school children and ensure that all citizens have access to primary education and the opportunity to achieve their full economic and social potential.

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