How will investing in kids pay off in the short-run?

I’m continuing to do a series of posts that provide brief answers to questions I’ve received about early childhood programs.

Today’s question: “How will investing in kids pay off in the short-run? The major benefits of investing in early childhood programs would appear to occur 20 or 30 years in the future, when former participants in these programs have joined the labor force and entered their prime earnings  years.”

Short-run benefits of early childhood programs include cost savings due to a reduced need for remedial programs in K-12, such as special education.

Another important short-run benefit is that high-quality early childhood programs are increasingly important in attracting parents with valuable skills to a state.

We already know that parents care about school test scores in choosing a location. We know that from evidence from the housing market on what increases housing prices. Of two otherwise identical houses, the one zoned to an elementary school with the higher test scores will sell for more.

Even if parents don’t know about the availability and quality of early childhood programs, higher quality early childhood programs will attract parents and drive up property values by raising elementary school test scores.

If one takes the known effects of preschool on school test scores, and the known effects of school test scores on property values, each dollar of annual spending on preschool will raise property values by $13. That increase in property values represents parents voting with their feet.

A state that can attract parents will experience both increased property values and a better quality labor supply in the short-run.

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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