Over the past decade, many countries have made important progress in improving human capital

SIMULATIONS USING THE HCI QUANTIFY COVID-19’S IMPACTS ON HUMAN CAPITAL
COVID-19 is placing countries’ hard-won human capital gains at risk. A lesson from past pandemics and
crises is that their effects are not only felt by those directly impacted, but often ripple across populations
and, in many cases, across generations. This underscores the urgent need to protect and rebuild human
capital to foster recovery in the short and longer terms.
Setbacks during certain life stages - chiefly early childhood - can have especially damaging and long-lasting
effects on human capital accumulation. For example, during childhood, the link between parental
income and child health is particularly strong.9 In previous crises, poorer nutrition and reduced wellbeing
among pregnant mothers led to permanent losses in their children’s cognitive attainment, as
well as higher chronic disease rates when the children became adults.10 COVID-19 is likely to produce
similar outcomes. In this crisis, human-capital impacts associated with economic shocks come atop
reductions in care linked to service disruptions during the pandemic’s acute phase. As such, the current
shock to family incomes, even if transitory, may have repercussions for years to come. Children in disadvantaged
families will be disproportionately vulnerable to all these effects, thus deepening existing
inequalities.
The HCI methodology can be used to quantify some of the potential impacts of COVID-19 on the future
human capital of children and youth. For young children—those born during the pandemic or who are
currently under the age of five—disruptions to health systems, reduced access to care, and family income
losses will materialize as increased child mortality, malnutrition, and stunting. Because stunting and educational
outcomes are closely intertwined, the pandemic risks durably setting back children’s learning.
According to HCI-based simulations, in low-income countries, young children today can expect their
human capital to be about 1 percent lower than it would have been in the absence of COVID-19.
At the height of the pandemic, close to 1.6 billion children worldwide were out of school. For most children
who are currently of school age, the pandemic has meant that formal teaching and learning no
longer happen face to face. Since the ability to roll out distance learning differ across countries, and
even within countries, considerable losses in schooling and learning can be anticipated. The income
shocks associated with COVID-19 will also force many children to drop out of school. Putting these effects
together suggests that the pandemic could reduce global average learning-adjusted years of school by
half a year, from 7.8 to 7.3 years. Translated into the terms of the HCI itself, this loss means a drop of
almost 4.5 percent in the HCI of the current cohort of children. For a country with an HCI of 0.5, this
signifies a drop of 0.025 HCI points, a reduction of the same order of magnitude as the HCI increase that
many countries have achieved over the past decade.
Without a strong policy response now, the pandemic’s negative human-capital effects will likely continue
to reduce countries’ productivity and growth prospects for decades. In 20 years, roughly 46 percent of
the workforce in a typical country (people aged 20 to 65 years) will be composed of individuals who were
either in school or under the age of five during the COVID-19 pandemic. A typical country at that time
could still show a loss in its HCI of almost 1 full HCI point (0.01) due to COVID-19. That is, even if the
pandemic turns out to be a temporary shock, the COVID-19 shock could still leave current cohorts of
children behind for the rest of their lives. No society can afford to let that happen.