investinginkids

In chapter 12 of Investing in Kids, I also provide estimates for how an increase in the attainment of bachelor degrees will affect a state’s economic development. Although some bachelor degree holders will leave their home state, others will remain. Enough will remain that an increase in bachelor degrees has large effects on attracting better jobs and raising state per capita earnings.

I estimate that for each state resident that becomes a holder of a bachelor’s degree, the increase in the present value of per capita state earnings is $376,000. This benefit is sufficient to justify costly programs to increase bachelor degree attainment. For example, a program that would increase bachelor degree attainment by 10% would make sense if its costs per participant were up to $37,600.

The U.S. has long been far ahead of most of the world in bachelor degree attainment. But this advantage is narrowing or disappearing. For example, consider statistics from the Organization for Economic Cooperation and Development, an organization of 34 mostly high-income democratic market economies (most Western European countries, Japan, etc.).  Over all 34 OECD countries, the percentage of 25-34 year olds with a bachelor’s degree or higher degree in 2008 was 26.9%. The U.S. had a higher percentage at 32.3%. But the difference is narrowing.  In 2001, the OECD average bachelor degree attainment for this age group was 17.9%, versus the U.S. figure of 29.9%. The U.S advantage has narrowed in just 7 years from 12.0% to 5.4%.

Obviously there are policies dealing with student financial aid, how colleges are organized, and K-12 that can affect bachelor degree attainment. But college attendance and degree attainment may also be affected by early childhood programs.  There is evidence from Perry Preschool, the Chicago Child-Parent Center, and the Abecedarian program that suggests effects on college attendance and graduation.

An important unanswered question is how universal access to preschool would affect college graduation rates for children from middle-class families. The existing long-term studies of preschool consider disadvantaged children. Their baseline college attendance and graduation rates tend to be low. It seems plausible that effects of preschool on college graduation rates of students from middle-class families might be higher, as more of these students will be on the verge of being able to succeed at college with a little better preparation.  Given the importance of higher education to U.S. economic competitiveness, the effect of universal preschool on college graduation deserves further research.

In chapter 12 of Investing in Kids, I also consider how reducing the high school dropout rate benefits a state economy. As with early childhood programs and other educational investments, reducing high school dropouts affects economic development by affecting labor force quality. Many of those persons who otherwise would be high school dropouts will remain in that same state. Their presence will attract more and better jobs to the state. This raises state per capita earnings, my definition of state economic development benefits.

In analyzing the benefits of reducing high school dropouts, I conservatively assume that only a small proportion of the additional high school graduates will go on and complete post-secondary education. Specifically, I assume that only one-fifth will get further education and only 6% will get a bachelor’s degree.  Economic development benefits will be greater if additional measures are taken to increase post-secondary education.

I estimate that converting one high school dropout to a high school graduate has economic development benefits of $175,000 for a state economy. This figure is less that the present value of earnings due to high school graduation. For example, it does not include the additional earnings for high school graduates who move out of state.

Most public policies that attempt to reduce high school dropout rates will not have 100% success. Some students targeted would have graduated from high school even without the dropout prevention program. Not all students targeted by the program will graduate from high school. However, even a program with very small effects on high school graduation rates can justify considerable expenses per student, based on state economic development benefits. For example, consider a program that causes 1% of the population to switch from being a high school dropout to a high school graduate. Such a program would have state economic development benefits exceeding costs even if it cost any amount up to $1,750 per student.

Better skill quality for state residents has enormous payoffs for a state economy. Such payoffs can justify costly investments as long as these investments produce results.

None of this is to say that high school programs are the best way to reduce high school dropouts. There are few high school programs that are proven successes in reducing high school dropouts.  In contrast, high-quality preschool has been shown to reduce high school dropouts. For example, the Chicago Child-Parent Center Program increased the high school graduation rate by 6.8 percentage points.  School reform and improvement is promoted by high-quality early childhood programs.

One question I have sometimes been asked is how to most effectively make the economic case for early childhood programs to the business community and to policymakers. I certainly have no magic answers. But here are a few suggestions, based on my own experience.

First, do the preparatory work necessary to elicit participation by business and policy makers.  I have presented at numerous state and local “business summits” on the economic case for early childhood programs. The extent to which such summits are actually attended by the business community and policymakers has varied quite a bit. Sometimes I have ended up preaching to the choir of early childhood advocates, with only a few token business attendees. Other times the business and policy maker attendance has been strong. Unfortunately, “if you schedule it, they will come” does not always work for business summits. You need to convince people that it is worth their while to come, have the right people asking people to come, and be sensitive to schedules of the business community and policy makers.

Second, combine larger events with smaller scale meetings. Some of my best meetings have been small meetings with groups such as Chamber of Commerce Education Committees, or a few local business leaders or legislators. In such small groups, concerns about how to ensure quality and accountability for results can be more frankly shared, and possible compromise solutions discussed.

Third, you need advocates within the business community to present some of this case. Policy wonks like me are helpful (I hope), but insufficient to make the case to the business community and the policy community. You need to identify advocates within the business and policy maker community who are particularly open to the argument that early childhood education can make a difference.  Sometimes such an advocate speaks out of personal experience of the difference that educational opportunities have made to the advocate’s success. Sometimes the advocate has children in the public school system. Personal commitment matters.

Fourth, be patient. This economic case needs to be developed over time and in a wide variety of ways. Success may depend on showing that local programs can work. Developing such locally-based evidence takes time. But if a local program can grow and establish a reputation for success, its political roots will help maintain the program through the sometimes-wild political winds.

In short, there are no quick fixes. Large-scale implementation of early childhood programs is a fundamental change in the educational structure of the U.S. Making such a fundamental change is challenging. There will be resistance. The economic case is important because it provides a justification for such fundamental changes, in that these changes are productive ways of improving economic wealth and well-being. But people need to be persuaded of this economic case over time, through a variety of means, and by a variety of evidence.