Last month, we published a cost-benefit analysis of the impacts of a potential universal pre kindergarten program in Ohio. We estimated that a universal pre kindergarten program would lead to between $220 and $750 million of benefits for Ohio, largely in the form of higher future earnings for the children who would be enrolled.
When we did this analysis, we focused our analysis on impacts that would be realized down the road. Benefits such as future earnings, reduced future crime, and lower participation in special education programs are all beneficial, but they don’t help people today.
When we look at future benefits, we always make sure to discount them so that we capture how much people are willing to pay today for those benefits in the future. There is a lot of debate about how exactly to do this, but it's important to remember that when we are conducting a cost-benefit analysis, we are trying to capture how much people today care about investing in the future.
A big part of the reason we care about benefits that don’t get realized until far into the future is because there has been a growth of evidence of these long-term benefits in economic research. Recent advances in the study of intergenerational impacts led by the legendary economist James Heckman have shown how the benefits of providing assistance to very young children can compound over time and create huge benefits for years to come.
However, new research shows that universal pre kindergarten may not just be a long-term policy, it can deliver meaningful short-term economic benefits as well.
A new working paper looks at the effects of universal prekindergarten programs across nine states, specifically focusing on the short term employment impacts. The findings show that universal prekindergarten programs not only increased enrollment in early education, but also boosted labor force participation, employment, and hours worked, especially among mothers of young children. These programs reduced child care constraints, enabling more parents to work or work more hours.
Interestingly, the paper found that the benefits weren’t just limited to parents of young children. Other women, such as informal caregivers or those considering starting families, also saw employment gains, demonstrating the fact that universal pre kindergarten creates positive externalities.
Importantly, the size of these effects varied by location. There were larger economic gains in areas with higher enrollment and stronger program quality. In other words, well-designed and well-attended universal pre kindergarten programs don’t just help children, they function as a form of economic stimulus, boosting household earnings and labor force participation in the near term.
The authors of this paper also calculated how much additional tax revenue would come as a result of these employment gains. Amazingly, they estimate that there might be enough additional tax revenue to cover the upfront costs of the program entirely. This fiscal impact means that universal prekindergarten might not represent much of a short term burden at all, since it would not have to take away money from other short term public programs.
One limitation of this study is that it did not value time spent at home, effectively ignoring the major cost of the program. While labor market time is valuable for employers and employees, it requires parents to give up nonmarket time, which is valuable on its own.
So, while the long-term benefits of universal pre kindergarten are substantial and well-documented, this new research reminds us that the economic case for universal prekindergarten isn't just about the future, it's also about helping families and communities today.