The cost of early school-leaving and school failure

Abstract

This report examines how low educational attainment is associated with significant economic costs for private individuals, for taxpayers, and for society. Specifically, higher education levels are associated with higher earnings, increased labor market participation, better health status (including lower prevalence of epidemic disease), and improvements in family decision-making; education is also associated with lower rates of poverty and intra-household benefits such as improved family nutrition. It describes the method for calculating these costs of school failure. It then highlights methodological challenges as well as key assumptions that underlie estimates of the overall costs of school failure. The method is illustrated with case studies from seven countries: Indonesia; Ghana; Kenya; Pakistan; Mexico; Chile; Ukraine; and Egypt. Using the best available research evidence, the gross costs of school failure are calculated for each of these countries. In each case these costs are significant. However, the magnitude of these costs depends on several key assumptions, including: the appropriate discount rate; the valuation of informal activity; and the economic value of improved health.

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