How much can universal pre-K do to reduce income inequality?

In his September 13, 2013 column in the New York Times, Nobel-prize-winning economist Paul Krugman discussed the growing problem of increased American inequality.

As one solution, Professor Krugman mentioned the idea of “universal prekindergarten education”, in order “to expand opportunity for the children of the less fortunate”, which would “do at least a bit to level the playing field”.

A natural question is:

How much can universal pre-K do to reduce income inequality?

The brief answer: A large amount for the lowest income quintile and middle income quintile, but it is still not a complete solution.

A more complete solution for the lowest income quintile would add further redistributive efforts which could include developmental child care programs such as Educare or parenting programs such as the Nurse Family Partnership.

A more complete solution for the middle income quintile would consider other measures that provide public services that are both productive and at least modestly redistributive, such as programs to improve public education and increase access to higher education. We should also consider how to run the economy at a lower unemployment rate to put upward pressure on wages.

The best recent research on pre-K suggests that universal pre-K would cause similar percentile increases in test scores for different income groups. This research comes from both my research with Gormley and Adelstein on Tulsa’s pre-K program, and Weiland and Yoshikawa’s research on Boston’s pre-K program.

Based on the research of Chetty and his colleagues, we would expect these similar percentile increases in test scores to result in similar DOLLAR increases in adult earnings for all income groups. But the key point is that a similar dollar increase in adult earnings for all income groups is still a huge redistribution of income.

In my 2011 book, Investing in Kids, I projected that if universal pre-K has equal dollar effects on all income groups, then even one school year of half-day pre-K would boost the income of the lowest income quintile by 6%, and the income of the middle income quintile by 2%. (See Table 8.4)

In our analysis of Tulsa, we similarly found that one year of half-day pre-K would boost the future earnings of children eligible for a free lunch subsidy by 7%. Children whose family income was too high to be eligible for any lunch subsidy would have future earnings increased by 3%.

A full-day pre-K program would do more. In Tulsa, we found such a program would boost future earnings of the free lunch eligible group by 10%, and for the higher income group by between 5 and 6%.

Adding a second year of pre-K would do even more. The available evidence (see chapter 5 of my 2011 book) suggests that a second year of pre-K might multiply the one-year earnings effect by 1.5.  So we might find that two years of full-day pre-K would boost the lowest income quintile’s earnings by up to 15%, and the middle income quintile by 8 or 9%.

How much of a dent does this make in the increased income inequality in the U.S.? In a previous post, I calculated that over the last 30 years, increased income inequality has reduced the income of the lowest income quintile by 40% compared to what it would have been if this income group had equally shared in the benefits of overall U.S. economic growth. For the middle-income quintile, increased income inequality has meant 30% lower income than if this group had equally shared in income growth.

So, universal pre-K, by itself, might fill a considerable portion of the gap for the lowest income quintile and the middle income quintile. How much depends upon whether we are talking about a one-year half-day program vs. two years of full-day pre-K.

The price tag? Universal half-day pre-K for one year has a national price tag of around $15 billion, or $50 per capita. Expanding to a full-day or to two years could blow up this price tag by up to a factor of four. In terms of a U.S. economy with over $16 trillion in annual output, even a price tag of $60 billion is not huge.

For the lowest income quintile, programs such as Educare would do even more. This full-time developmental child care from ages zero to five might boost earnings by 25% or more. The available evidence suggests such a program would only benefit children from low-income families, not children from middle-income families. The price tag for this program is $40 billion, but the program is more politically difficult because it only benefits the lowest-income group.

It is perhaps unfair to expect early childhood education to completely “solve” a huge economic and social problem such as massive increases in income inequality. What is perhaps surprising is how much early childhood education might do on its own to address this issue. Early childhood education is not a complete solution to income inequality, but it would be a good start.

About timbartik

Tim Bartik is a senior economist at the Upjohn Institute for Employment Research, a non-profit and non-partisan research organization in Kalamazoo, Michigan. His research specializes in state and local economic development policies and local labor markets.
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One Response to How much can universal pre-K do to reduce income inequality?

  1. Thanks for mentioning parenting programs as part of the solution for US income inequality. In future blogs I’d like to see you expand on how parenting, childcare and education programs can work together to provide a continuum of intervention for families and their children.

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