The problem of long-delayed benefits of early childhood programs

One political problem faced by early childhood programs is the long delay before most benefits are realized.

Although there are other economic development benefits of early childhood programs, most of the economic development benefits occur due to the better skills and higher labor force participation rates of former child participations. Obviously we are not having 4 year old pre-schoolers enter the labor market at age 5.  Therefore, most of the benefits of early childhood program occur when former child participants enter the labor market, particularly when they reach prime earnings years.

Even the benefits for parents from early childhood programs may be long delayed. Early childhood programs may increase the quantity and quality of the labor supply of the parents of child participants by providing low-cost or free child care, or by otherwise encouraging more self-sufficiency. A majority of the benefit from the effect on parents is the effect on the long-run labor force participation rates of these parents.

As reported in chapter 7 of Investing in Kids, the immediate economic development benefits for a state economy from early childhood programs are considerably less than annual costs. I estimate that the boost to state per capita earnings from these programs is 20 to 30% of program costs in the years immediately after some early childhood program is initiated.

Eventually the boost to the state economy is much greater than program costs. In the long-run, the boost to per capita earnings in a state is from two and a half to four and a half times as great as annual program costs. But it takes a long time to get to that long-run. I estimate that the boost to state residents’ per capita earnings does not exceed program costs for around 20 years after the program is started.

Now, the present value of the future increase in state per capita earnings is two to three times the present value of program costs. So, from a rational, policy wonk view, high-quality early childhood programs have economic development benefits that significantly exceed costs.

But from a political perspective, these long-run economic development benefits occur well after any political leader’s term in office is over. Why should politicians be supportive of these programs, even though they don’t have short-run economic development benefits exceeding costs?

The answer I give in chapter 7 of Investing in Kids is that these programs may have some short-run economic benefits that either are less obvious, or that require some policy effort to develop. I will outline some of these short-run benefits in subsequent posts. Among the most prominent possible short-run benefits of high quality early childhood programs are: (1) lower costs for special education; (2) increased property values; and (3) possible synergistic effects with job training programs for the parents of the child participants.

However, a larger political point is that if our society is to prosper, we somehow need to rediscover the political and social will to invest in the long-term. If we just focus on the short-term, what future will the U.S. have? As the cliché goes, the best time to plant a tree is 20 years ago. The second best time to plant a tree is today.

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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