«January 2015 Contents Executive Summary Introduction I. Early Childhood Investments in the United States Early Childhood Programs: From Home Visiting ...»
THE ECONOMICS OF EARLY
I. Early Childhood Investments in the United States
Early Childhood Programs: From Home Visiting to Kindergarten
The Economics of Investing in Young Children
Benefits to Children
Benefits to Parents
Benefits to Society
Inequalities in Parental Time, Resources, and Education
Changes in Work and the Need for High-Quality Early Care and Education
II. The Impact Early Childhood Interventions on Children and Parents
The Effects of Early Childhood Programs for Very Young Children
Maternal Home Visiting
Early Care and Education Programs for Infants and Toddlers
The Effects of Early Care and Education Programs for Preschool-Aged Children
The “Active Ingredients” in Successful Early Childhood Programs
Teacher Quality and Professional Development
Parental Involvement and Quality of Out-of-School Time
Administration Proposals to Increase Investments in Early Education
III. Cost-Benefit Analysis of Preschool Programs
Estimating the Benefits of Spending on Early Childhood Programs
Early Childhood Education as a Long-Term Investment
Early childhood, beginning in infancy, is a period of profound advances in reasoning, language acquisition, and problem solving, and importantly, a child’s environment can dramatically influence the degree and pace of these advances. By supporting development when children are very young, early childhood development and education programs can complement parental investments and produce large benefits to children, parents, and society.
An analysis by the President’s Council of Economic Advisers describes the economic returns to investments in childhood development and early education. Some of these benefits, such as increases in parental earnings and employment, are realized immediately, while other benefits, such as greater educational attainment and earnings, are realized later when children reach adulthood. In total, the existing research suggests expanding early learning initiatives would provide benefits to society of roughly $8.60 for every $1 spent, about half of which comes from increased earnings for children when they grow up.
High-quality early education for all would narrow the achievement gap. Dozens of preschool programs have been rigorously examined since the 1960s. Overall, across all studies and time periods, early childhood education increases cognitive and achievement scores by 0.35 standard deviations on average, or nearly half the black-white difference in the kindergarten achievement gap. Since higher income children are currently more likely to have access to high-quality early education, expanding access to all would narrow the achievement gap.
Early childhood education can boost children’s earnings later in life. Long-term analyses suggest that early childhood education can increase earnings in adulthood by 1.3 to 3.5 percent. A long-term follow-up of a World War II-era universal child care program in the United States found that the adult earnings of individuals who benefitted from this care as children increased by 1.8 percent annually. These earnings gains alone are consistently bigger than the costs of such programs.
Earnings gains from increased enrollment in early childhood education would provide benefits that outweigh the costs of the program. Researchers estimate the gain in income for recent statewide programs over a child’s career to be $9,166 to $30,851, after taking out the cost of the program. If all families were able to enroll their children in preschool at the same rate as high-income families, enrollment would increase nationwide by about 13 percentage points and yield net present value of $4.8 billion to $16.1 billion per cohort from earnings gains alone after accounting for the cost of the program. In the long run, these earnings gains translate into an increase in GDP of 0.16 to
Parents recognize the importance of early childhood investments and, despite working longer hours for pay, both mothers and fathers are also spending more time interacting with their children. Early childhood education programs can strengthen parents’ attachment to the labor force and increase their earnings potential by providing a safe and nurturing environment that furthers the education and development that parents are providing at home.
High-quality, affordable child care can help parents balance work and family responsibilities. Studies show that providing better access to and lowering the cost of high-quality care can significantly increase mothers’ employment rates and incomes. This increase in family income has been shown to improve children’s outcomes as well.
Children who enter school at higher levels of readiness have higher earnings throughout their lives. They are also healthier and less likely to become involved with the criminal justice system.
These positive spillovers suggest that investments in early childhood can benefit society as a whole.
Early childhood education can lower involvement with the criminal justice system.
Research shows that improving cognitive and socio-emotional development, investments in early childhood education may reduce involvement with the criminal justice system.
Lower crime translates into benefits to society from increased safety and security as well as lower costs to the criminal justice system and incarceration.
Early childhood interventions can reduce the need for remedial education. Research shows that benefits in children’s development may also reduce the need for special education placements and remedial education, thereby lowering public school expenditures.
The estimated benefits to society from investing in early childhood education are large and go beyond the estimated increase in earnings for children as they become adults. While it is difficult to put a precise number on the sum total in gains to parents and society, research shows that gains that come from the benefits to children’s employment and earnings far outweigh the costs.
The last several decades have brought tremendous strides in our understanding of early childhood development. Researchers have established that early childhood, beginning in infancy, is a period in which profound advances take place in individuals’ reasoning, language acquisition, and problem solving, and more importantly, that a child’s environment can dramatically influence the degree and pace of these advances. By supporting development when children are very young, early childhood education programs can complement parental investments and produce large benefits to children, parents, and society.
Many parents understand that early childhood is a period of great opportunity for shaping a child’s way of interacting with his or her world, and will influence a child’s ability to navigate adulthood. Mothers and fathers alike now spend more time interacting with their children than they did 50 years ago and are directing more family resources to activities and consumption that enrich their child’s learning. They are increasingly providing types of care that are likely to be particularly beneficial to their children’s development, like reading, playing, and taking children to extra-curricular activities.1 This increase in active caregiving among both mothers and fathers has occurred at the same time as there has been an increase in time spent working by mothers, and a rise in the proportion of households in which all parents are working.
Not only does high-quality early childhood education benefit a child’s development, but it also helps support parents who are struggling to balance work and family obligations. The share of parents reporting work-family conflict has increased over the past 40 years,2 and almost half of all working parents have turned down a job they felt would interfere with their family obligations.3 While workplace supports such as paid leave and flexible scheduling are a crucial ingredient to help parents balance work and family, a safe, nurturing environment that supports their children’s development is also important in supporting working families. By providing such care, early childhood education programs can strengthen parents’ attachment to the labor force and increase their earnings potential. Higher labor force participation and earnings has potential benefits for children, such as higher health care expenditures, higher education spending, more consistently nutritious food and reduced household budgeting stress.
By both helping kids develop early foundational skills and by allowing more parents to actively pursue careers, investments in early childhood development provide benefits not just for children and their parents, but for society as a whole. Children who enter school at higher levels of readiness have higher earnings throughout their adult lives. They are also healthier and less likely to become involved with the criminal justice system. These positive spillovers suggest a role CEA calculations using the American Time Use Survey from the years of 2002 to 2014. Earlier data comes from Bianchi et al. 2006.
Horn (2012) using 2008 National Study of the Changing Workforce, Families and Work Institute; 1977 Quality of Employment Survey, U.S. Department of Labor.
49 percent of working parents have chosen to pass up a job they felt would conflict with family obligations (Nielson 2014).
for government to support investments in early childhood development. The United States has recognized this, and over the past half century, we have made tremendous strides in expanding access to high-quality early childhood education. The Administration has supported expansions of home visiting programs shown to improve parenting behavior and children’s outcomes in many low-income families. The Federal government currently invests over $5 billion annually to provide access to high-quality child care to nearly 1.5 million children through the Child Care and Development Fund (Office of Child Care 2014a,b). Head Start, established as part of the War on Poverty in 1964, and Early Head Start, established in 1994, collectively provide access to highquality education for over 1 million low-income children ages five and under annually.
Preschool programs at the State level have further expanded access to early childhood education such that today over half of three- to four-year-olds are enrolled in either preschool or kindergarten. Today, 40 States and the District of Columbia have in place State-funded preschool programs, serving more than one-quarter of all four-year-olds in the 2012-13 school year. To further increase opportunities for all children to begin kindergarten school-ready, the Administration has proposed expanding high-quality preschool for all low- and middle-income four-year-olds, maintaining low-income families’ access to affordable child care, and making effective home visiting programs for new parents more widely available.
This report describes the economic returns to investments in childhood development and early education. Reviewing recent research, it is clear that early education programs in general are good investments. In the short-run, programs have been shown to increase earnings and employment for parents. In the long-run, the programs can benefit participants and society by increasing the earnings and employment of participants, improving health, reducing anti-poverty spending, and reducing crime. Research shows that past early learning initiatives have provided total benefits to society, including reduced crime, lower anti-poverty transfers, and educational savings, of up to $8.60 over a child’s lifetime for every $1 spent, and current programs will likely yield similar benefits.
I. Early Childhood Investments in the United States