The Economic Cost of Out-of-School Children in Southeast Asia

Although significant progress toward achieving universal primary education has been made over the past decade, out-of-school children (OOSC) remain a pervasive global problem. According to the UNESCO Institute for Statistics, there are nearly 58 million OOSC of primary school age in the world, 7 million of whom are in East Asia and the Pacific (EAP). While EAP has a relatively low rate of OOSC and has made major strides toward achieving universal primary enrollment, we show that there are significant economic costs associated with maintaining the status quo of recent years and that continued effort to enroll Southeast Asia’s remaining OOSC is urgently needed. 

To underscore the importance of reducing the number of OOSC in Southeast Asia, this paper uses two methods to estimate the economic cost associated with OOSC in seven countries – Cambodia, Indonesia, Lao PDR, the Philippines, Thailand, Timor-Leste, and Vietnam. The first estimation approach uses labor market data to estimate the total earnings that will be forfeited in the near future due to undereducated workers if primary school enrollment patterns do not change. The second approach is based on a cross-country regression that estimates the relationship between national education attainment and per capita income in East Asia.