Why early childhood education can significantly reduce income inequality

President Obama’s State of the Union address Tuesday night is rumored to talk about a variety of measures to reduce income inequality (perhaps reframed as building “ladders of opportunity” for the poor and middle-class), including early childhood education. I thought it useful to review again why early childhood education can be of particular help in boosting the economic prospects of lower income groups, thereby reducing economic inequality.

First, even if pre-K is universally available, the evidence suggests that high-quality pre-K provides a similar dollar boost to future earnings for children from all income classes. But because children from lower-income families tend to have lower baseline future economic prospects, the percentage boost to earnings from universal pre-K is much greater for children from lower-income households.

Second, the evidence suggests that high-quality child care programs and high-quality parenting programs are much more effective in boosting future incomes for children for lower-income families than for other income groups. As a result, it makes sense for child care and parenting programs to be targeted at lower-income groups, as the benefit-cost ratio for these programs will be far greater for these groups.

How much good can early childhood education do to boost income prospects for children from low-income families? Full-day pre-K for one school year at age 4 can boost long-run earnings by 10%.  A more expensive full-time child care and pre-K program from birth to age 5 can boost future earnings for children from lower-income families by 26%. High-quality parenting programs such as the Nurse Family Partnership could boost earnings another 3%.  Therefore, the earnings boost from a comprehensive package of early childhood education programs could be as great as 29%.

I think most people would regard a 29% boost to earnings as a large earnings boost.  Empirically, such an earnings boost would be roughly sufficient to offset the amount that income growth for the lowest income quintile in the U.S. has lagged behind average income growth since 1979.

Why does early childhood education tend to reduce income inequality? Parenting and child care programs provide services that many lower-income families are unable to provide adequately on their own, unlike higher-income families. For pre-K programs, all children benefit from a service that helps promote cognitive skills as well as social skills and character skills in a group setting. But it’s inherently harder to provide the same percentage boost to middle-class earnings from a service delivered with uniform quality to all children, as the baseline earnings for middle-class groups are so much higher.  As writers such as Lane Kenworthy have emphasized, universal public services of high quality for all are inherently redistributive even if they benefit all income groups.

Early childhood education by itself does not solve all the problems of income inequality and limited upward mobility. The broader K-12 system and higher education and training system need reform to be more effective and provide broader access to all. We need to figure out how to revitalize the American system of job creation to make full employment a reality. A variety of measures from higher minimum wages to expanded wage subsidies are needed to increase take-home wages. But greater access to higher-quality early childhood education can help provide all children with the skills they need to take advantage of the opportunities provided by a better educational and economic system.

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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