Crisis and education
By Lykke E. Andersen*, La Paz, 10 September 2007.

During the crisis of 1999-2003, most economic and social indicators in Bolivia showed significant deteriorations -- even the ones you would not expect to. While poverty rates and unemployment rates may go up during a recession and progress in the provision of basic services may stagnate, you would not expect the education levels of adults to go down, nor the share of households who use electricity in their house to decrease.

But according to the annual MECOVI household surveys carried out in Bolivia this is exactly what happened. The share of people who use electricity in their house went down from 71.2% in 1999 to 69.1% in 2003/4, and the share of the working age population who has university level education went down from 11.8% in 1999 to 9.9% in 2003/4.

How is this possible?

Most likely because many relatively well-educated people left the country during these difficult years. Figure 1 shows the percentage of each cohort in Bolivia who has university education. This percentage went up for the youngest cohort (born between 1975 and 1984) throughout the recession, whereas it went down for the next two cohorts (born between 1955 and 1974) and stayed more or less constant for the oldest cohort (1945-1954).

Figure 1: Education levels in Bolivia, by cohort, 1999 - 2005

Source: Author’s calculations based on various MECOVI household surveys.

This suggests that when there is a lack of employment opportunities, young people keep studying, while many people in their late twenties to mid forties feel forced to emigrate. Fortunately some of them have returned after the recession ended, as education levels for all cohorts went up in 2005.

Such high international mobility among the better educated segments of the population implies that even the most rigid social indicators will tend to fluctuate with the economic cycles, and indeed it may even exacerbate economic cycles, as the richest and most well-educated take their talents and spending elsewhere during downturns.

Ó Institute for Advanced Development Studies 2006. The opinions expressed in this newsletter are those of the author and do not necessarily coincide with those of the Institute.

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