The costs of school dropout over the past 11 years amount to around EUR 15.7 billion, about 5.23% of Romania's annual GDP, shows the Report on the Economic Impact of School Dropout, conducted for AmCham by the University of Bucharest.
The report is one of the first attempts to measure in economic terms "a worrying social phenomenon", with the aim of bringing clarity about the costs at the individual and societal level, and to support the adoption of public policies and measures to reduce school dropout in Romania, an AmCham release informs on Thursday.
"Human capital and education are central priorities for AmCham. After looking at the economic cost of the labor deficit last year, we continued the series of AmCham analysis by addressing one of Romania's most important challenges - school dropout. Together with our partners from the University of Bucharest, we wanted to see how much it costs us as an economy and society to have the highest early school leaving rate in the European Union - 16.6% in 2023. According to our analysis, every year, around 23,000 students leave school, and there are long term consequences: a dropout earns on average around 190,000 less over their lifetime than a highschool graduate. This is more than statistics, the figures tell a story of missed opportunities, of unfulfilled potential," said Elisabeta Moraru, member of the AmCham Romania Board of Directors and Chair of the AmCham working group dedicated to education.
The report found that the general average dropout rate, including the 2013-2021 cohort, is 23,147 students per cohort. Additionally, Romania has the lowest adult education rates in the EU with a participation of 1% in 2020, 5.7% in 2022, and 6.7% in 2023 among people aged 25 - 64.
"Considering differences in active working life, the average lifetime earnings of a dropout amount to EUR 353,736, compared to EUR 544,210 for a high school graduate, reflecting into a significant lifetime economic disadvantage of EUR 190,473. Lifetime costs for all individuals who dropped out between 2005-2013 and 2016-2024 total EUR 107 billion, about 35.67% of Romania's annual GDP (estimated at EUR 300 billion). Annual expenditures on dropout costs for the 12 analyzed cohorts amount to approximately EUR 2.3 billion, about 0.77% of Romania's annual GDP. The costs of dropouts from the 12 analyzed cohorts over the past 11 years amount to around EUR 15.7 billion, about 5.23% of Romania's annual GD," the report states.
The rural environment was particularly affected by dropouts in 2023, with a rate of 27.5%, much higher than in urban areas, highlighting the vulnerability of pupils in rural. In contrast, small urban areas (cities and suburbs) have a much lower dropout rate of 14.3%, while large urban areas (municipalities) had the lowest dropout rate of only 3.3%.
Professor Dragos Iliescu from the University of Bucharest, the coordinator of the report, emphasized that this is also an initiative to support solutions to reduce the school dropout phenomenon, adding that education and the school dropout phenomenon should also be considered as an "investment-profit" ratio.
The American Chamber of Commerce in Romania - AmCham Romania is the most representative business association, recognized for facilitating a consistent public private dialogue on the economic agenda and for its contribution to strengthening the economic relations between Romania and the United States. With over 30 years of presence in Romania, AmCham currently brings together over 570 American, international and Romanian companies with cumulative investments of over 30 billion dollars in Romania.
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