Spillover benefits of early childhood education may more than double economic benefits

In my new book, From Preschool to Prosperity, I devote an entire chapter to discussing “spillover benefits” of early childhood education, that is benefits that spillover from the families participating in early childhood programs to other people. Evidence suggests that spillover benefits are large enough to more than double economic benefits.

Spillover benefits are important because they provide an argument, from the perspective of enlightened self-interest, for why all voters should support early childhood education. Some voters do not have children. Some voters with children may believe that their families do not need any government assistance with early children education. Why should such voters be willing to pay taxes to provide early childhood education for “other people’s children”? Compassion is one rationale, but enlightened self-interest provides a complementary rationale: early childhood education can be argued to provide economic benefits for all voters, including those who do not have children in these programs.

One important spillover benefit of early childhood education is the effects of broader development of skills on overall business competitiveness and hence worker wages. Business productivity and competitiveness depends on overall worker skills, not just one individual worker’s skills. I can be the most skilled worker in the world, but my employer will find it more difficult to introduce new technologies unless my co-workers are also skilled. Greater skills by my co-workers will thus enable my employer to be more competitive and increase my wages. In addition, my employer’s competitiveness and ability to pay high wages may also depend on the skills of the suppliers to my employer. Finally, my employer’s competitiveness, in high tech clusters such as Silicon Valley, may depend on the flow of ideas and skilled workers across competing firms in related industries, and therefore greater skills in these clusters will increase overall cluster wages.

These skill spillovers explain the empirical finding that an individual’s wages depend not only on his or her own educational level, but also on the average education level of all other workers in the same metropolitan level. These empirical estimates of wage determinants find that the spillover effects on others’ wages of an individual getting more education actually are greater, summed over all workers, than the direct effects on the individual’s own wages.

Therefore, I benefit, and my children benefit, if “other people’s children” get more skills, through early childhood education or other policies. This goes against the intuitive notion that some people have that there is a fixed number of good jobs that pit my children’s interests against the interests of other children. This intuition is wrong because when we increase everyone’s skills, the number of good jobs will expand in response, and will expand enough that everyone’s opportunities are enhanced.

We’re all in this economy together. If policies broadly raise skills, this will increase overall economic productivity and prosperity. Early childhood education is one research-proven strategy for broadly increasing skills in a cost-effective manner.

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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