How does a state’s investment in early childhood programs pay off for the state?

I’m continuing to provide brief answers to questions I’ve received at presentations I have made on early childhood programs.

Today’s question is the following:

“How does a state’s investment in early childhood programs pay off for the state? We live in a mobile society. If our state invests more in young children, won’t most of them end up just moving elsewhere?”

Answer: Americans are not as hyper-mobile as people sometimes think. Although many Americans move, over 60% of all Americans spend most of their working career in the same state in which they spent their early childhood.

If we are able to better develop the skills of children in our state, our state will in the long-run have a labor force with higher skills. This higher skill labor force will attract businesses.

We live in a world where businesses can easily ship inputs and outputs all over the world. But it’s harder to ship workers. Businesses still need to locate where they can readily find workers with the skills they need. If the local labor force is higher quality, this is a key competitive advantage for a state or local economy.

This higher quality labor force will entice businesses to locate in the state; it will help improve the competitiveness of a state’s existing businesses, which will make it easier for them to gain market share and expand; and a higher quality state labor force will encourage business start-ups, because these start-ups will know that skilled workers will be available for their needs.

As a result, higher quality early childhood programs will attract more and better jobs to a state’s economy. These more and better jobs will increase per capita incomes, increase  property values, and increase state and local government receipts more than the need for added state and local government expenditures.

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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