In understanding the connection between early childhood education and local economic development, I think that people intuitively get how early childhood programs can lead to a “better path” of skills acquisition. People intuitively understand from their own experiences, and those of people they know, that kids do much better if they start out on the right path in learning, rather than getting side-tracked. The notion that “skills beget skills”, as Nobel-prize-winning economist James Heckman has argued, makes intuitive sense.  We all know that if you get off to a good start in learning any set of skills, it is easier to learn more skills.

What is less intuitive, for most people, is the local economic development case for early childhood education. How does all of this skills development lead to more and better local jobs?

In some sense this entire blog is devoted to answering this question. But in the interests of brevity, here are the top five reasons why investing in early childhood education can drive better local job creation:

1. Human capital is the key local competitive factor for businesses that is not readily portable. In a global economy, most factors of production are readily transportable, such as capital, energy, information, etc. Labor is not so portable. You can’t just put your business anywhere and expect to get the labor skills you need.
2. Human capital matters not just to my individual business, but to building regional clusters of businesses. The importance of a local area’s job skills is not just the workers I recruit for my business, but also the skills of workers working in similar businesses in my local industry cluster, as well as workers in the suppliers that are part of that cluster. Regional clusters of industries, such as in Silicon Valley, steal ideas and workers from one another. Therefore, any individual business’s productivity depends in part of the skills of its local competitors. In addition, the competitiveness of a cluster depends in part on the productivity of local suppliers, which depends on the skills of these suppliers’ workers.
3. Early childhood education is one of the most cost-effective methods of developing better local worker skills. If a local area is going to seek prosperity through developing better local job skills, early intervention will do more local skills enhancement at lower costs than alternative policies.
4. Early childhood education is particularly good at increasing soft skills, which are of great importance to businesses. Much of early childhood education’s long-run effects depend upon its benefits for the development of soft skills, such as the ability to get along with others and with authority figures, and the ability to plan, to defer gratification, and to be self-confident and proactive. Most businesses will tell you that such soft skills are at least as important as literacy and math skills in determining the success of their workforce, as workers need these skills to deal with co-workers, supervisors, and customers, and to work in teams and exert leadership.
5. A large percentage of early childhood education participants will stay in the same local economy as working adults. Over 60% will stay in the same state, and over 50% will stay in the same metropolitan area. This is important because it means that early childhood education can enhance the local area’s workforce quality. Americans are not as hyper-mobile as sometimes supposed. People will stay due to the familiar places and people of their home.  The percentage staying is not much lower in economically distressed areas, as slow growth reduces in-migration more than it increases out-migration.