Even under conservative estimates, early childhood education can do quite a bit to address income inequality

On September 16, the latest Census Bureau statistics on poverty and income distribution were released. Among other things, these latest stats showed a stagnant trend in relative income of different groups, based upon the Current Population Survey, which omits some incomes of very high-income groups. But this recent stagnant trend is in the context for a longer-term trend towards a much more unequal income distribution, with top incomes growing faster than income for the lowest income quintile or the middle-income quintile. (The lowest income quintile consists of households whose income puts them in the lowest fifth of all households; the middle-income quintile consists of households whose income puts them in the middle fifth of all households.)

As Conor Williams highlighted in his recent review, my new book, From Preschool to Prosperity, highlights that a full-scale commitment to a package of early childhood education proposals could make a major difference to the U.S. income distribution. Specifically, I estimate that a package of universal pre-K plus high-quality early child care for all low-income families could offset 5/6ths of the adverse income distribution trends of the last 30 years for the lowest income quintile, and 1/6ths of the adverse income distribution trends of the last 30 years for the middle-income quintile.

What I want to emphasize in this blog post is that my book’s estimates are quite conservative estimates. I am only counting estimates of the direct earnings effects of early childhood education on the earnings levels of former child participants. By raising skills, early childhood education can help both low-income children and middle-income children to increase their earnings as adults by large percentages, over 25 percent for the lowest income group, and about 5 percent for the middle-class.

But these estimates are deliberately quite conservative estimates that omit some possible additional effects. These estimates are conservative because it is hard to reliably quantify some of these additional effects based on the most rigorous possible research.

Some possible additional effects of early childhood education on the income distribution include:

  •  High-quality child care and parenting programs for low-income groups will boost parental earnings (I’ll have more to say about this effect tomorrow);
  • The increased worker skills for both former child participants, and parents, will have spillover effects on the earnings of others (I’ll have a blog post on this in the next few weeks, and my TED talk deals with this topic);
  • The increased earnings of former child participants will have second-generation effects on the earnings of their children;
  • My estimates assume that higher overall skills only affects productivity levels in the economy, but higher skills may also boost the overall rate of innovation and productivity growth in the economy.

It is hard to exactly quantify how all these effects will alter the American income distribution. But it seems likely that the boost to parental earnings will help the lowest income quintile the most, as will the second generation effects. In addition, the available evidence indicates that skill boosts tend to help lower-income workers in the economy the most. How changes in innovation will alter the economy is hard to say, but if all workers have more skills, one might think that technology and the economy might adapt to more fully utilize the skills of all workers.

In general, it is hard to completely model in any rigorous fashion all the social consequences of a full-scale commitment to early childhood education. What will happen in various neighborhoods if this investment leads to a drop in overall crime? How will political participation change if a higher percentage of all workers are more educated and better informed? One could go on.

What we can say is that even without some of these more profound effects of a full-scale investment in early childhood education, the direct effects we can quantify will have large benefits in helping make the income distribution more progressive. Early childhood education cannot by itself solve the income distribution problem. But a full-scale investment in high-quality versions of these early childhood programs can make a major difference in both growing our economy and more broadly distributing that growing economy’s wealth.

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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