A landmark report warns that school disengagement among more than 26,000 Victorian year eight students will cost the state economy $33 billion over their working lives.

Economist and report author Stephen Walters told 3AW Breakfast hosts Ross Stevenson and Russel Howcroft around one-quarter of the disengaged students would never end up in formal employment.

Press PLAY to hear how Walters calculated the $33 billion cost

“There is a big loss of income for them, there’s a really big loss of productivity for the state … there’s really big costs you can add up over their lifetime,” he said.

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