Investments in early childhood education improve outcomes for program participants—and perhaps other children too

According to a growing body of empirical work, governments that spend money on early childhood education get a lot of bang for their buck—an estimated 7 percent to 10 percent annual return for programs targeted at disadvantaged children. Research by University of Chicago economist James Heckman and Princeton economist and Equitable Growth Steering Committee member Janet Currie found strong evidence that early childhood education results not only in substantial short-term boosts in test scores but also long-term improvements in human capital and earnings. But do those test-score gains last? A handful of studies on individual early childhood programs in recent years have reached mixed conclusions on the durability of test score improvements from early childhood education over time.

Mariana Zerpa, an Equitable Growth grantee and an economist at the University of Leuven in Belgium, addresses this question in a new Equitable Growth working paper. Zerpa constructs the largest and most representative dataset of targeted and universal state preschool programs in the United States, using individual-level data from the Current Population Survey and the National Health Interview Survey to analyze the short- and medium-term effects of early childhood education on academic outcomes. Zerpa compares 15 states that implemented or expanded early childhood programs between 1997 and 2005 to states where programs were not implemented during this period. While previous research has analyzed data on specific programs, Zerpa’s is the first to include such a wide and representative array of targeted and universal state-level programs.

Zerpa finds that children in states with early childhood education programs are 30 percent less likely to repeat a grade between ages 6 and 8—and that this effect lasts at least until age 12. Pre-Kindergarten programs also substantially reduce the probability of developmental and behavioral problems for children between ages 4 and 8, with approximately 60 percent of the effect sustained through age 12. Though the study uncovers one potential negative effect of early childhood programs—that pre-K expansions are associated with an average increase of 0.6 days in absences from school due to illness—this small effect disappears after 4 years. Furthermore, while Zerpa finds that universal programs result in greater “crowd-out” via switching from private to public preschools, she does not find statistically significant differences in the effects of the two categories of programs—in contrast to previous research finding universal programs to be more effective.

In addition to using her combined dataset to examine outcomes for all children ages 4 to 12 who live in states with pre-K programs, Zerpa also incorporates Current Population Survey data on individual pre-K enrollment to drill down and focus on the subset of children who participated in early childhood programs. In this secondary analysis, Zerpa again finds large, statistically significant improvements in academic—as well as developmental—outcomes for children who participated in early childhood education. The Current Population Survey data does not measure which specific pre-K programs students take part in, so Zerpa calculates ranges (instead of precise estimates) for the effect of enrolling in a state pre-K program.

Zerpa estimates that participation in a state early childhood program could reduce the likelihood of grade repetition between ages 6 and 8 by 13 percentage points to 34 percentage points for children who otherwise would not have been in center-based preschool. Zerpa hypothesizes that the large size of this effect reflects the fact that students who enroll in early childhood education programs from informal home care have particularly high risks of grade repetition, as they are more likely to be economically disadvantaged. Furthermore, this finding is consistent with several studies whose estimated impacts of preschool programs such as Head Start fall squarely within the intervals Zerpa calculates.

In addition to addressing a pressing question in the economic literature on early childhood education—do academic gains from early childhood education last?—Zerpa’s paper confirms that pre-Kindergarten programs are a worthwhile investment with direct and indirect returns lasting at least 8 years after preschool. Specifically, Zerpa demonstrates that pre-K expansions durably reduce grade repetition, as well as the occurrence of developmental and behavioral problems, for at least 8 years for the cohort of children who enroll in pre-K at age 4.

Taken as a whole, the magnitude of Zerpa’s findings indicates that state early childhood programs might have effects not only on children who otherwise would not have attended preschool, but also on children drawn from other, lower-quality preschools and even on other children who don’t attend preschool at all via peer effects. These results represent a powerful message to state policymakers considering expanding or creating early childhood programs.

While Zerpa’s paper presents more evidence of the positive effects of pre-K expansions, it also raises additional questions on the mechanisms through which these effects operate. To better understand the long-term effects of preschool on children and the associated savings for taxpayers, researchers need data tracking the educational and labor market outcomes for program participants across the course of their lives. Moreover, to separate out the direct and indirect effects of these programs, researchers also need data that tracks the outcomes of the siblings, future classmates, and other peers of program participants. While this will be a substantial undertaking, policymakers at all levels should work with researchers to make these data available for statistical analysis.

Previous research by former Equitable Growth economist Robert Lynch and former Research Analyst Kavya Vaghul has found that the aggregate benefits of early childhood programs more than cover their costs over time. If confirmed, the peer effects Zerpa references could result in even greater improvements in educational, developmental, and labor market outcomes for children—and thus even greater savings for society as whole.