Loss-of-Learning and the Post-Covid Recovery in Low-Income Countries

Loss-of-Learning and the Post-Covid Recovery in Low-Income Countries
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Volume/Issue: Volume 2022 Issue 025
Publication date: February 2022
ISBN: 9798400200755
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Topics covered in this book

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Labor , Economics- Macroeconomics , Public Finance , Economics / General , Covid-19 , Public Investment , Growth , Debt , Fiscal Policy Human Capital , Labor Markets , Welfare , Covid recovery , IMF working paper Institute , baseline calibration , loss-of-learning effect , wage curve , internal rate of return , production function , COVID-19 , Human capital , Wages , Global

Summary

We analyze the medium-term macroeconomic impact of the Covid-19 pandemic and associated lock-down measures on low-income countries. We focus on the impact over the medium-run of the degradation of health and human capital caused by the pandemic and its aftermath, exploring the trade-offs between rebuilding human capital and the recovery of livelihoods and macroeconomic sustainability. A dynamic general equilibrium model is calibrated to reflect the structural characteristics of vulnerable low-income countries and to replicate key dimensions of the Covid-19 shock. We show that absent significant and sustained external financing, the persistence of loss-of-learning effects on labor productivity is likely to make the post-Covid recovery more attenuated and more expensive than many contemporary analyses suggest.