THE ECONOMICS OF EARLY 

CHILDHOOD INVESTMENTS

 

December 2014
2

Contents

Executive Summary....................................................................................................................................... 3

Introduction .................................................................................................................................................. 5

I. Early Childhood Investments in the United States............................................................................... 7

Early Childhood Programs: From Home Visiting to Kindergarten ............................................................7

The Economics of Investing in Young Children.........................................................................................8

Benefits to Children ..............................................................................................................................8

Benefits to Parents................................................................................................................................9

Benefits to Society ................................................................................................................................9

Inequalities in Parental Time, Resources and Education........................................................................10

Changes in Work and the Need for High-Quality Early Care and Education ..........................................14

II. The Impact Early Childhood Interventions on Children and Parents.................................................. 17

The Effects of Early Childhood Programs for Very Young Children ........................................................17

Maternal Home Visiting ......................................................................................................................17

Early Care and Education Programs for Infants and Toddlers............................................................18

The Effects of Early Care and Education Programs for Preschool-Aged Children ..................................20

The “Active Ingredients” in Successful Early Childhood Programs.........................................................25

Curriculum...........................................................................................................................................26

Program Duration ...............................................................................................................................26

Teacher Quality and Professional Development ................................................................................27

III. Cost-Benefit Analysis of Preschool Programs................................................................................. 29

Estimating the Benefits of Spending on Early Childhood Programs.......................................................30

Early Childhood Education as a Long-Term Investment.........................................................................31

Conclusion................................................................................................................................................... 33

References .................................................................................................................................................. 35
3

Executive Summary

Early childhood, beginning in infancy, is a period of profound advances in reasoning, language 

acquisition, and problem solving, and importantly, a child’s environment can dramatically 

influence the degree and pace of these advances. By supporting development when children are 

very young, early childhood development and education programs can complement parental 

investments and produce large benefits to children, parents, and society. 

An analysis by the President’s Council of Economic Advisers describes the economic returns to 

investments in childhood development and early education. Some of these benefits, such as 

increases in parental earnings and employment, are realized immediately, while other benefits, 

such as greater educational attainment and earnings, are realized later when children reach 

adulthood. In total, the existing research suggests expanding early learning initiatives would 

provide benefits to society of roughly $8.60 for every $1 spent, about half of which comes from 

increased earnings for children when they grow up. 

 High-quality early education for all would narrow the achievement gap. Dozens of 

preschool programs have been rigorously examined since the 1960s. Overall, across all 

studies and time periods, early childhood education increases cognitive and achievement 

scores by 0.35 standard deviations on average, or nearly half the black-white difference 

in the kindergarten achievement gap. Since higher income children are currently more 

likely to have access to high-quality early education, expanding access to all would narrow 

the achievement gap.

 Early childhood education can boost children’s earnings later in life. Long-term analyses 

suggest that early childhood education can increase earnings in adulthood by 1.3 to 3.5 

percent. These earnings gains alone are bigger than the costs of such programs. 

 Earnings gains from increased enrollment in early childhood education would provide 

benefits that outweigh the costs of the program. Researchers estimate the gain in 

income for recent statewide programs over a child’s career to be $9,166 to $30,851, after 

taking out the cost of the program. If all families were able to enroll their children in 

preschool at the same rate as high-income families, enrollment would increase 

nationwide by about 13 percentage points and yield net present value of $4.8 billion to

$16.1 billion per cohort from earnings gains alone after accounting for the cost of the 

program. In the long run, these earnings gains translate into an increase in GDP of 0.16 to 

0.44 percent. 

Parents recognize the importance of early childhood investments and, despite working longer 

hours for pay, both mothers and fathers are also spending more time interacting with their 

children. Early childhood education programs can strengthen parents’ attachment to the labor 

force and increase their earnings potential by providing a safe and nurturing environment that 

furthers the education and development that parents are providing at home. 
4

 High-quality, affordable child care can help parents balance work and family 

responsibilities. Studies show that providing better access to and lowering the cost of 

high-quality care can significantly increase mothers’ employment rates and incomes. This 

increase in family income has been shown to improve children’s outcomes as well.

Children who enter school at higher levels of readiness have higher earnings throughout their 

lives. They are also healthier and less likely to become involved with the criminal justice system. 

These positive spillovers suggest that investments in early childhood can benefit society as a 

whole. 

 Early childhood education can lower involvement with the criminal justice system. 

Research shows that improving cognitive and socio-emotional development, investments 

in early childhood education may reduce involvement with the criminal justice system. 

Lower crime translates into benefits to society from increased safety and security as well 

as lower costs to the criminal justice system and incarceration.

 Early childhood interventions can reduce the need for remedial education. Research 

shows that benefits in children’s development may also reduce the need for special 

education placements and remedial education, thereby lowering public school 

expenditures.

The estimated benefits to society from investing in early childhood education are large and go 

beyond the estimated increase in earnings for children as they become adults. While it is difficult 

to put a precise number on the sum total in gains to parents and society, research shows that 

gains that come from the benefits to children’s employment and earnings far outweigh the costs. 
5

Introduction

The last several decades have brought tremendous strides in our understanding of early 

childhood development. Researchers have established that early childhood, beginning in infancy, 

is a period in which profound advances take place in individuals’ reasoning, language acquisition, 

and problem solving, and more importantly, that a child’s environment can dramatically

influence the degree and pace of these advances. By supporting development when children are 

very young, early childhood education programs can complement parental investments and 

produce large benefits to children, parents, and society. 

Many parents understand that early childhood is a period of great opportunity for shaping a 

child’s way of interacting with his or her world, and will influence a child’s ability to navigate 

adulthood. Mothers and fathers alike now spend more time interacting with their children than 

they did 50 years ago and are directing more family resources to activities and consumption that 

enrich their child’s learning. They are increasingly providing types of care that are likely to be 

particularly beneficial to their children’s development, like reading, playing, and taking children 

to extra-curricular activities.

1 This increase in active caregiving among both mothers and fathers 

has occurred at the same time as there has been an increase in time spent working by mothers,

and a rise in the proportion of households in which all parents are working.

Not only does high-quality early childhood education benefit a child’s development, but it also 

helps support parents who are struggling to balance work and family obligations. The share of 

parents reporting work-family conflict has increased over the past 40 years,2 and almost half of 

all working parents have turned down a job they felt would interfere with their family 

obligations.

3 While workplace supports such as paid leave and flexible scheduling are a crucial 

ingredient to help parents balance work and family, a safe, nurturing environment that supports

their children’s development is also important in supporting working families. By providing such 

care, early childhood education programs can strengthen parents’ attachment to the labor force 

and increase their earnings potential. Higher labor force participation and earnings has potential

benefits for children, such as higher health care expenditures, higher education spending, more 

consistently nutritious food and reduced household budgeting stress.

By both helping kids develop early foundational skills and by allowing more parents to actively 

pursue careers, investments in early childhood development provide benefits not just for 

children and their parents, but for society as a whole. Children who enter school at higher levels 

of readiness have higher earnings throughout their adult lives. They are also healthier and less 

 

1 CEA calculations using the American Time Use Survey from the years of 2002 to 2014. Earlier data comes from 

Bianchi et al. 2006.

2 Horn (2012) using 2008 National Study of the Changing Workforce, Families and Work Institute; 1977 Quality of 

Employment Survey, U.S. Department of Labor.

3 49 percent of working parents have chosen to pass up a job they felt would conflict with family obligations 

(Nielson 2014).
6

likely to become involved with the criminal justice system. These positive spilloverssuggest a role 

for government to support investments in early childhood development. The United States has 

recognized this, and over the past half century, we have made tremendous strides in expanding 

access to high-quality early childhood education. The Administration has supported expansions 

of home visiting programs shown to improve parenting behavior and children’s outcomes in 

many low-income families. The Federal government currently invests over $5 billion annually to 

provide access to high-quality child care to nearly 1.5 million children through the Child Care and 

Development Fund (Office of Child Care 2014a,b). Head Start, established as part of the War on 

Poverty in 1964, and Early Head Start, established in 1994, collectively provide access to highquality education for over 1 million low-income children ages five and under annually. 

Preschool programs at the State level have further expanded access to early childhood education

such that today over half of three- to four-year-olds are enrolled in either preschool or 

kindergarten. Today, 40 States and the District of Columbia have in place State-funded preschool 

programs, serving more than one-quarter of all four-year-olds in the 2012-13 school year. To 

further increase opportunities for all children to begin kindergarten school-ready, the 

Administration has proposed expanding high-quality preschool for all low- and middle-income 

four-year-olds, maintaining low-income families’ access to affordable child care, and making 

effective home visiting programs for new parents more widely available.

This report describes the economic returns to investments in childhood development and early 

education. Reviewing recent research, it is clear that early education programs in general are

good investments. In the short-run, programs have been shown to increase earnings and 

employment for parents. In the long-run, the programs can benefit participants and society by 

increasing the earnings and employment of participants, improving health, reducing anti-poverty 

spending, and reducing crime. Research shows that past early learning initiatives have provided 

total benefits to society, including reduced crime, lower anti-poverty transfers, and educational 

savings, of up to $8.60 over a child’s lifetime for every $1 spent, and current programs will likely 

yield similar benefits. 
7

I. Early Childhood Investments in the United States

Extensive literatures in economics, neuroscience, and psychology all conclude that early 

childhood investments can benefit children, parents, and society. Both researchers and parents 

understand that early childhood, beginning in infancy, is a period of profound opportunities to 

advance children’s skills in reasoning, language acquisition, and problem solving. Accordingly, 

mothers and fathers alike now spend more time interacting with their children than they have in 

the last 50 years.

At the same time as mothers and fathers are increasingly taking more active roles in their 

children’s lives, they are also working more. As parents balance competing responsibilities of 

work and family, access to high-quality child care and early education programs has become 

more critical. This section reviews the economics of early childhood investments, the types of 

investments serving young children and their families, and how investments in early childhood 

education have changed over the past 50 years.

Early Childhood Programs: From Home Visiting to Kindergarten

Advances in child development research demonstrate that the cognitive abilities and socioemotional capabilities of young children change dramatically in the first few months and years of 

life. Infants have different developmental needs than preschoolers, and accordingly, early 

interventions take different forms depending on a child’s age. This report reviews the evidence 

concerning the impacts of various early childhood investments across these different age groups.

Several types of public investments target child development from before children are born and 

throughout early childhood. Nurse home visiting programs rely on trained nurse educators to 

visit families during pregnancy and shortly after a baby is born to provide a range of health and 

parenting information. This includes parental observations and instruction, nutrition and 

wellness education, and psychological consultations. The goal of home visiting programs is to 

ensure a healthy, safe, and supportive environment in the first years of a child’s life. Additionally, 

Early Head Start provides early, continuous, intensive, and comprehensive child development 

services to infants and toddlers and their families, as well as expectant families.

Child care is another major form of early childhood investment for young children. Child care

takes many forms, from in-home care with a neighbor or relative, to professional in-home care, 

to center-based care. Child care is a critical mechanism for early learning and family work 

support. Some child care programs also provide structured education to help support a child’s 

early cognitive and socio-emotional development. These programs, often referred to as early 

childhood education, can benefit children of all ages. This report reviews the evidence on several 

major early care and education programs, including home visiting and Early Head Start. Preschool

programs, which this report defines as center-based education programs for three- and fouryear-olds, include public programs such as Head Start and state-funded preschool programs, as 

well as private preschool programs. Preschool programs generally utilize trained teachers and a 

focused curriculum, vary in length and intensity, and may include supportive services such as 
8

parent visits or health services. Almost all early childhood programs aim to build early cognitive 

or non-cognitive4skills that prepare children for kindergarten. In addition to fostering children’s 

development and learning, these programs offer a safe and reliable setting for children. Once 

children enter elementary school, high-quality, full-day kindergarten can further help children’s 

development.

Although each of these investments is targeted at children in a different stage of development, 

all have the potential to improve cognitive and socio-emotional outcomes for children by 

increasing the time, attention, and learning resources children receive in an early stage of 

development. Because parents often need to balance work and family responsibilities, most of

the programs we review also have the potential to enable parents to participate in the labor force 

by providing a source of care for their children. These increases in parental earnings in turn

increase the amount of resources available to children, and can contribute to further 

improvements in child development.

The Economics of Investing in Young Children

Early childhood investments take many forms, including increasing the amount and quality of 

parental and caregiver time, attention, and education and training; providing and improving 

instructional materials, providing child care curricula, and modifying parental habits and 

behaviors. Regardless of the exact form of the investments, there are several channels through 

which early childhood investments are believed to benefit children. Some of these are direct, in 

which investments in children improve their outcomes. Others work indirectly, for example by 

helping parents to increase their labor force attachment, which then indirectly benefits children

through higher household income.

Benefits to Children

Researchers have outlined three main theories that point to early childhood as a particularly 

important time to invest in children. First, investments made when children are very young will 

generate returns that accrue over a child’s entire life. Since the benefits are realized over a longer

time horizon the earlier in life they are made, early childhood interventions are likely to generate 

substantial benefits – both to the affected child and to his or her community.

5

A second reason that early childhood investments benefit children’s development may be that 

the flexibility and capacity for change in cognitive functioning and brain development is the 

greatest for young children, and these changes can have lasting effects on behavior throughout 

life (Knudsen et al. 2006). Work at the intersection of economics, neuroscience, and child 

development shows that characteristics that are often assumed to be hereditary, such as IQ, can 

be influenced by environmental factors in early childhood.

6 Under this model, not only do earlier 

 

4 This refers to skills that are not direct measurements of cognition, including socio-emotional and behavioral skills.

5 This is a central tenet of the human capital model in economics; see Becker (1962) and Ben-Porath (1967). 

6

See (Jensen 1980), National Scientific Council on the Developing Child (2007).
9

investments generate benefits over a long time period, but each dollar invested produces greater 

impacts since children’s brains are developing most rapidly when they are young.

Third, early investments can have large impacts if early skillsserve as a multiplier, or complement, 

for later skills.

7 For example, it may be that the extent of skill acquisition in early elementary 

school depends on the degree of skills attained before entering kindergarten, and skills learned 

in adolescence depend on mastery of these elementary skills. Under this “skill begets skill” model,

early investments in child development can enhance the productivity of future investments in 

human capital. Since early education may serve as a complement for later skills gained in highquality elementary and later education, it is important for children to have access to high-quality 

education at all ages in order to maximize the benefits of early education. A continuum of highquality education ensures that early investments can be strengthened and built upon in later 

years (Currie and Thomas 2000).

Research is ongoing to more fully understand the mechanisms through which early childhood 

investments benefit children. As such, it is premature to conclude that any one of the models 

above is the sole channel through which benefits arise. 

Benefits to Parents

Access to high-quality care for young children can help parents increase their employment and 

earnings. Parents who have child care options are better able to work, and to work more hours. 

In the short-term, this enables parents to work more and provide additional income for their 

families, ultimately benefitting the children. In the longer-run, this increased attachment to the 

labor force and increased work experience translate into long-term earnings benefits for parents 

who have the opportunity to send their kids to high-quality preschool. Many studies show that 

providing better access to and lowering the cost of high-quality child care can significantly 

increase mothers’ employment rates and incomes, and this increase in family income can

improve children’s outcomes.

8 Additionally, programs with parent support components, such as 

home visiting, have a number of other benefits for parents, including increased confidence and 

reduced stress, potentially improving the overall well-being of the family by extension (Heckman 

et al. 2014). 

Benefits to Society

In addition to benefiting children and parents, the benefits of early education extend to society 

as a whole. These spillover benefits, what economists call positive externalities, include 

reductions in crime, and lower expenditures on health care and on remedial education.

By improving cognitive and socio-emotional development, investments in early childhood 

education may reduce involvement with the criminal justice system. Lower crime translates into 

benefits to society in the form of lowered costs of the criminal justice system and incarceration, 

 

7 Cunha et al. (2006); Cunha and Heckman (2007).

8 Karoly et al. (1998); Barnett and Masse (2007); Temple and Reynolds (2005).
10

as well as reductions in victimization costs.

9

Likewise, these benefits in children’s development 

may also reduce the need for special education placements and remedial education, thereby 

lowering public school expenditures.

10

Some early childhood investments, such as Early Head Start, Head Start, and maternal home 

visiting programs, which offer access to immunizations, health services, or parenting education, 

have also been shown to improve the health of program participants (Olds et al. 1998). These 

health improvements benefit not only recipients, but also society, through lower expenditures 

on emergency care and health insurance.

Inequalities in Parental Time, Resources and Education

Today, parents of all income levels are spending more time with their children than previous

generations.

11 This additional time, particularly time spent playing and engaging in a child’s 

development, is important for early cognitive development. For example, research demonstrates 

that reading to children is crucial for early language acquisition and communication skills.

12 While 

parents across the income distribution have increased the amount of time spent with their 

children, inequalities persist in parental resources, earnings, and education. This inequality 

during early childhood also affects adult outcomes, and is one reason suggested for the high 

correlations of income across generations (Solon 1992). For instance, when mothers obtain more 

education, it improves birth outcomes for their children (Currie and Morretti 2003).

Parents in the top income quintile now spend seven times more on enrichment activities and 

materialsfor their children—such as books, computers, summer camps, and music lessons—than 

families in the bottom income quintile (Duncan and Murnane 2011). Moreover, as income 

inequality has grown, so has inequality in child-related expenditures. The gap is also reflected in 

the total time spent with children and in the types of activities on which that time is focused. In 

particular, as shown in Figure 1, high income parents spend more time on educational activities 

with their children. 

 

9 Heckman et al. (2010b); Currie (2001); Reynolds et al. (2001).

10 Anderson (2014); Reynolds et al. (2001, 2002); Belfield et al. (2006); Heckman et al. (2010b); Carneiro and Ginja 

(2014).

11 Ramey and Ramey (2010); Bianchi (2010).

12 Shonkoff and Phillips (2000); Tamis-LeMonda, et al. (2004).
11

While parents of all levels of education are spending more time with their children, the largest 

increases in parental time have occurred among parents with higher levels of education (Ramey 

and Ramey 2010). In addition to spending more time with their children, highly-educated parents 

are spending time on activities, such as playing with young children and encouraging older 

children’s extra-curricular activities that are particularly likely to support children’s development 

(Ramey and Ramey 2010). For example, highly-educated parents spend more time on developing 

their children’s reading and problem solving skills in preschool, and spend more time on extracurricular activities for older children. In contrast, parents with less than a college degree are less 

likely to adapt their time use patterns with children to developmental stages.13 Differences in 

parental inputs are reflected in a gap in children’s vocabulary by parents’ educational attainment: 

highly-educated mothers tend to engage in more complex talk with their children and spend 

more time reading, and at 2 and 3 years old, their children have more expansive vocabularies 

than children whose exposure to books and language was lower (Vernon-Feagans et al. 2012).

The Administration has proposed expanding parental education and supports, including maternal 

home visits, which may help reduce the inequality in young children’s vocabulary.

Demographic changes are also contributing to greater resource inequality between children born 

to parents with more and less education. Although average ages at first marriage have converged 

across women and men of different education levels, ages at first birth have not. While women 

with a high school degree have their first child around age 22, similar to 20 years ago, women 

with a college degree or higher tend to first give birth when they are in their late 20s and early 

30s (Figure 2). As a result, parents with less education, and therefore lower average lifetime 

earnings, also tend to have children earlier in their careers when their earnings are low. The gap 

in age at first birth has increased between low- and highly-educated women, further contributing 

to the gap in family resources experienced by children born to more and less educated parents.

 

13 Kalil, Ryan, and Corey (2012); Kalil (2014).

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1.4

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1.8

2.0

High Income Low Income High Income Low Income

Source: American Time Use Survey, 2013.

Note: High income refers to top quartile while low income refers to bottom quartile. Includes 

time spent helping students with homework, attending school meeting, reading to or with 

children, and other activities assosicated with chilren's education.

Figure 1: High Income Parents Spend More Time on 

Educational Activities with their Children

Hours/Week Mothers Fathers
12

Lower-income families also tend to have more children. For example, women below the Federal 

Poverty Level are expected to have one more child than those at 300 percent of the poverty level 

or higher.

14 Other demographic forces behind the increasing disparity in resources available to 

children include high rates of divorce and nonmarital childbearing among low-income parents 

(McLanahan 2004), as well as close timing of births (Buckles 2008). All of these factors tend to 

reduce the amount of family resources, both financial and non-financial, that are available for 

each child during his or her early years.

Inequality in family financial and non-financial resources all contribute to achievement gaps that 

manifest very early in a child’s life. Disparities in cognitive, social, behavioral, and health 

outcomes between children from lower- and higher-income families, are evident in children as 

young as nine months of age and grow as children age (Halle et al. 2009). As shown in Figure 3, 

most of the income achievement gap emerges before age 5, remaining relatively level throughout 

elementary school and beyond. Some researchers argue that these gaps have grown over the 

past 50 years (Reardon 2011) but this remains an active area of research.

15

 

14 National Health Statistics Report (2012) using the National Survey of Family Growth, 2006-2010.

15 There is some disagreement on the comparability of achievement gaps across studies over time. While some 

studies suggest gaps in test scores across socioeconomic groups stabilize from primary school (Reardon 2011; 

Heckman 2006), others argue that differences in academic achievement based on standardized test scores are not 

comparable over time (Nielsen 2014).

18

20

22

24

26

28

30

32

34

1990 1995 2000 2005 2010

Advanced Degree

High School

Figure 2: Median Age at First Birth by Birth Year of First 

Child and Educational Attainment: 1990-2012 

College

Note: Three-year centered moving averages are shown.

Source: Current Population Survey, Fertility and Marital History Supplement, 2012

Age

Birth Year of First Child
13

Inequality in early child development is reflected in, and exacerbated by, differences in access to 

and utilization of early care and education programs by income and educational attainment. 

Participation in early childhood education is high among children from highly-educated and highincome families. About 60 percent of three- and four-year-olds whose mothers have a college 

degree are enrolled in preschool, compared to about 40 percent of children whose mothers did 

not complete high school. Although preschool attendance has increased for all education groups 

since the 1970s, children of less-educated mothers are still less likely to attend preschool, likely 

due to the significant cost burden of high-quality early childhood care. These gaps in preschool 

access exacerbate differences in childhood development outlined earlier.

While the majority of children with working parents have some regular child care arrangement, 

these arrangements can be a large burden on working families’ budgets. The Department of 

Health and Human Services defines affordable child care as costing no more than 10 percent of 

-0.8

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-0.4

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0

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0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Age

Test scores in standard deviations

Note: IQ scores are available through age 8. After age 8, math test scores are shown. A three 

year moving average is used for math scores.

Sources: 2013 U.S. Collaborative Perinatal Project (solid lines); NLSY79 Child and 

Young Adult Supplement (dashed lines).

Parent income in the lowest quartile

Parent income in the highest quartile

Figure 3: Achievement Gap Grows Throughout Childhood 

0

10

20

30

40

50

60

70

80

1968 1980 1991 2002 2013

Figure 4: School Enrollment Among 3 and 4 Year-Olds 

Remains Highest for Children of Highly Educated Mothers

Percent

No High School Degree

High School Degree

Some College

College Degree or Higher

Source: Current Population Survey, October Supplement, 1968-2013; Cascio and 

Schanzenbach (2013); CEA calculations.

Note: Enrollment data include preschoolers and kindergarteners. Data show 3-year centered 

moving averages. Breaks in series are due to 1994 CPS redesign.
14

family income. Lower-income families are less likely to have affordable care: among families with 

child care expenses and working mothers, families below the Federal Poverty Level paid an 

average of 30 percent of their income in child care costs, compared to 8 percent among non-poor 

families (Census Bureau 2013).

Changes in Work and the Need for High-Quality Early Care and Education

The need for high-quality, affordable early care and education has become especially important 

as most parents are working today. As female labor force participation has increased over the 

past 40 years, the fraction of households in which all parents work, and all parents work full-time, 

has increased (Figure 5). Currently, all parents work in the majority of households, including those 

with infants.

This trend highlights the necessity of affordable, accessible, high-quality child care that helps 

parents meet their work and family responsibilities. Having high-quality early care and education 

enables parents to increase their employment and earnings knowing their children are being well 

cared-for during the hours they are at work. The existing literature confirms that lower child care 

costs boost maternal employment. Although estimates vary, most studies find that a 10 percent 

reduction in child care costs increases maternal employment 0.5 to 4 percent.16 Single mothers’ 

work decisions appear particularly responsive to changes in child care costs.

Increased attachment to the labor force and increased work experience translate into long-term 

earnings gains for parents. By increasing the amount of resources available to the family, these 

earnings gains can also improve childhood outcomes including their adult earnings capacity when 

 

16 See, for example, Herbst (2010); Baker et al. (2005); Connelly and Kimmel (2003); Anderson and Levine (2000).

0

10

20

30

40

50

60

70

1968 1974 1980 1986 1992 1998 2004 2010

Children of Any Age

Youngest Child 

Under 12 

Months

Figure 5: Percent Households with Children in Which All 

Percent Parents Work Rising Steadily: 1968-2014

2014

Source: Current Population Survey, ASEC; CEA calculations.
15

children reach adulthood.17 As mentioned above, these feedback effects can be an important 

additional channel through which early childhood programs improve child outcomes.

Utilization of child care and early education programs has expanded over time. For example, it is 

perhaps unsurprising that since most children live in a household where all parents work, the 

majority of children under five (61 percent) have some type of regular child care arrangement. 

These children spend a large amount of time in care: the average time spent in care was 33 hours 

a week among children under five with at least one child care arrangement (Census Bureau 2013).

Enrollment in both public and private preschool programs has also risen over the past 40 years 

for children across the income distribution. Today, about half of three- and four-year-olds are 

enrolled in public or private preschool, defined as center-based prekindergarten programs, Head 

Start, or child care, compared to less than one-fifth in 1970.

18 A large share of the enrollment 

growth over the last several decades was driven by public investments. The largest Federal 

investment in public preschool began with the creation and expansion of Head Start. Head Start 

was established to provide education, parental supports, and nutritional assistance to children

from low-income families. Participation in Head Start has increased over the past 20 years, and 

today, Head Start serves nearly 1 million low-income three- and four-year-olds, in addition to 

nearly 110,000 children under age three through Early Head Start (Office of Head Start 2014). 

Over the past decade, states have also increased their investments in early childhood education 

by establishing and expanding their own preschool programs. Today, 40 states and the District of 

Columbia have established their own preschool programs, and as of the 2012-13 school year, 

these state programs serve more than one-quarter of all four-year-olds (Barnett et al. 2013).

 

17 Duncan, Morris, and Rodrigues (2011); Duncan, Ziol-Guest, and Kalil (2010).

18 In the Current Population Survey, children reported to be attending “nursery school” might be in day care centers, 

preschools, or Head Start programs, depending on how reference person interpreted “nursery school” (CPS School 

Enrollment Supplement File Technical Documentation).

0

5

10

15

20

25

30

35

1968 1972 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013

Figure 6: Public School Enrollment Rising Among 3 and 4 

Year-Olds While Private School Enrollment Levels Off: 

Percent 1968-2013

Source: Current Population Survey, October Supplement, 1968-2013; Cascio and 

Schanzenbach (2013); CEA calculations.

Note: Enrollment data include preschoolers and kindergarteners. Data show 3-year centered 

moving averages. Breaks in series are due to 1994 CPS redesign.

Private

Public
16

Federal public preschool investmentsin Head Start have also expanded since the 1960s. Although 

inflation-adjusted investment began to fall in the early to mid-2000s, Head Start’s funding was 

significantly boosted by the Recovery Act in 2010 and has remained high relative to its historical 

levels despite sequestration in 2013. 

0

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0.8

1

1.2

0

2

4

6

8

10

12

14

1966 1971 1976 1981 1986 1991 1996 2001 2006 2011

Federal Funding

Enrollment

Source: U.S. Department of Health and Human Services, Office of Head Start.

2014$ (Billions) Children Enrolled (Millions)

Figure 7: Head Start Enrollment and Funding Rising 

Consistently: 1966-2013
17

II. The Impact Early Childhood Interventions on Children and Parents

As noted above, the early childhood years offer many opportunities for investing in children in 

ways that lead to better outcomes later in childhood and even into adulthood. We review 

evidence on the impacts of child care investments targeting kids in two age ranges: infants and 

toddlers (from birth to age three) and preschoolers (ages three to four).

Within the broad category of early childhood interventions, there are clear and important 

differences. Programs target children at different stages of development, and timing alone may 

lead to different impacts because of the developmental reasons mentioned above. Even within 

the same types of programs, programs may vary with respect to resource levels, teacher training

requirements, and program duration, all of which may lead to further differences in effects. This 

report attempts to identify elements of program design that research has associated with larger 

or more lasting improvements in child outcomes. In doing so, we make an effort to understand 

the key ingredients behind “high-quality” early childhood programs, defined in this report as 

programs with features that have been shown to improve children’s achievement and cognitive 

outcomes. In our review of the evidence we limit ourselves to studies that use either random 

assignment, or other highly credible research designs that plausibly identify causal impacts of the 

interventions of interest. 

The Effects of Early Childhood Programs for Very Young Children

Maternal Home Visiting

Maternal home visits are usually targeted at infants and very young children, and provide health 

and child care education to support pregnant women and recent mothers. These voluntary 

programs can help parents raise healthy children in a positive environment. These programs can 

help mitigate inequality in family resources among infants, which contributes to the relatively

high postnatal mortality rate in the United States (Chen, Oster, and Williams 2014). By improving 

health outcomes and improving family self-sufficiency, these programs can benefit children and 

parents in the long-run.

One well-established program, the Nurse Family Partnership, providesfirst-time, unmarried, lowincome mothers with home visits during pregnancy through their child’s second birthday. 

Program participants had more time between the birth of their first and second child, lower

receipt of cash transfers, fewer arrests, lower rates of drugs and alcohol abuse, and lower rates 

of child abuse. These results held through the follow-up period, when children were 15 years old

(Olds et al. 1998).

A recent reanalysis of the Nurse Family Partnership program found that cognitive abilities 

improved by age six among children whose mothers participated in the program, primarily due 

to an improved home environment and improvements in parenting behavior, as well as greater 

self-esteem and lower anxiety among mothers. These early cognitive gains translated into 

improved language and math abilities and fewer school absences at age 12 (Heckman et al. 2014). 
18

More generally, a meta-analysis of home visiting programs found that these programs 

significantly improved parenting behavior and parenting attitudes, while increasing schooling 

enrollment among mothers (Sweet and Appelbaum 2004). Families with low birth-weight 

children saw the largest parenting and cognitive benefits, and programs that targeted teenage 

mothers were particularly effective in increasing maternal education. Another recent study found 

that Head Start programs that incorporated frequent home visiting were particularly effective at 

improving non-cognitive benefits compared to other Head Start programs (Walters 2014). Other 

models of home visiting programs are also showing promising results, with 16 models meeting

the Department of Health and Human Services’ criteria for evidence-based programs (Health 

Resources and Services Administration). Ongoing data collection will allow for further rigorous 

evaluation and help expand the knowledge base of the most effective components of home 

visiting programs.

Based on the large body of evidence showing the Nurse Family Partnership and similar home 

visiting programs’ positive impacts on children’s cognitive outcomes, federal support for home 

visiting programs began in 2008 and further expanded under the Affordable Care Act in 2010. 

This ACA expansion was recently extended with bipartisan support through March 2015, and the 

President proposed extending funding for another ten years in his 2013 State of the Union 

address.

Early Care and Education Programs for Infants and Toddlers

Parents are best able to work when they have access to stable, high-quality, affordable child care 

arrangements. Studies generally find that improving the affordability of child care increases 

employment. For instance, a universal subsidy that lowered the cost of child care to $5 a day in 

Quebec, Canada increased maternal labor force participation by about 8 percentage points.

19

Similarly, an evaluation of a near-universal child care program in the US during the 1940s 

substantially increased maternal employment (Herbst 2014). More recently in the US, child care 

subsidies that reduced the cost of child care by 10 percent increased employment among single 

women by 0.5 percentage points (Herbst 2010).

High-quality care can be a win-win for both children and parents by providing both the direct and 

indirect benefits described earlier. Specifically, child care may benefit children by increasing the 

likelihood that they are in safe and nurturing learning environments (Havnes and Mogstad 2011). 

By increasing the probability that mothers are working, increased child care access may also 

benefit children by increasing family resources, thereby reducing financial hardship and possibly 

parental stress (Forry 2009). 

Researchers have examined programs targeted to very young children to analyze how these 

benefits unfold over a child’s life. For example, in the Abecedarian Project (ABC), poor children

born in North Carolina between 1972 and 1977 were randomly assigned to receive full-time, highquality education from infancy through age five. Although the program served a relatively small 

 

19 Baker et al. (2005); Lefebvre and Merrigan (2008).
19

number of children (57), it is a landmark study for its rigor and detailed tracking of child and 

family outcomes over children’s lives.

Children’s gains from the Abecedarian Project persisted through adolescence and adulthood. At 

ages 8 and 12, program participants had higher cognitive scores and scored higher on math and 

reading achievement tests, and these achievement gains persisted through ages 15 and 21

(Ramey and Campbell 1984; Campbell and Ramey 1995). In addition, participants had higher high 

school graduation and college attendance rates, as well as more years of schooling. These 

achievement gains translated in to large earnings gains as participants entered the labor force.

At age 30, participants had income gains of over 60 percent relative to the control group 

(Campbell et al. 2012). The benefits of Abecedarian also accrued to parents, as the program 

increased mothers’ employment (Currie 2001) and increased maternal earnings by about

$90,000 over the mother’s career, almost twice as large as the earnings gains for participant 

children (about $50,000).

20 A recent study found that participants in the Carolina Abecedarian

Project had better health, including lower blood pressure (Campbell et al. 2014).

The Infant Health and Development Program (IHDP) expanded the Abecedarian model to eight 

U.S. cities, targeting a sample of low birth weight, premature infants. IHDP significantly improved

cognitive outcomes among a diverse group of students during the program and up to 15 years 

after completing the program.21 Low-income children benefited the most from the program, and

projections suggest that either a universal or income-based program similar to IHDP would 

essentially eliminate income-based gaps in IQ at age three and would substantially reduce IQ 

gaps at ages five and eight (Duncan and Sojourner 2012). 

While Head Start students are predominantly either three or four years old (at about 35 and 50 

percent of enrollment, respectively), Head Start also serves younger children through Early Head 

Start (Office of Head Start 2013). Early Head Start provides services for at-risk pregnant women, 

new mothers, children ages zero to three, and their families, and focuses on positive parenting 

and home environments and children’s developmental outcomes. Early Head Start served nearly

110,000 children ages two and younger in 2012-13 (Office of Head Start 2014). The Early Head 

Start Research and Evaluation Project randomly assigned children to receive Early Head Start 

services and tracked children’s performance into elementary school. Children who participated 

in Early Head Start showed less aggressive behavior, greater vocabulary and language 

development, and higher cognitive skills upon the program’s completion. These gains were 

especially pronounced among African-American children, for whom these gains persisted 

through elementary school. Parents who received Early Head Start services showed greater 

engagement during play and greater support for language and learning development at home 

(Faldowski et al. 2013). Other studies of Early Head Start have found similar results for cognitive 

development and language acquisition,22 as well as for home environments.23

 

20 Barnett and Masse (2007). Each of these figures is in 2014 dollars, with a 3 percent discount rate.

21 Brooks-Gunn et al. (1994); Gross et al. (1997); McCarton et al. (1997); McCormick et al. (2006).

22 Vogel et al. (2013); Vallotton et al. (2012); Chapin and Altenhofen (2010).

23 Bradley, et al. (2011); Chazan-Cohen et al. (2009); Roggman et al. (2004).
20

Some research shows that subsidies for high-quality child care can also improve children’s 

outcomes. Two studies from Norway demonstrate that child care subsidies can improve 

children’s academic performance (Black et al. 2011) and, later in life, increase educational 

attainment, decrease receipt of cash transfers, and increase labor market participation (Havnes 

and Mogstad 2011). Likewise, expansions of child care through the Lanham Act in the United 

States increased children’s educational attainment and earnings capacity, and these benefits 

were largest for the poorest children (Herbst 2014). It is important to note, however, that the

quality of child care is likely important for children’s outcomes. For example, low-quality care 

may explain why universal $5 per child care in Quebec was found to adversely affect children’s 

behaviors,

24 and why some studies of U.S. child care subsidies also find negative effects on child 

achievement and behavioral outcomes.25 These disparate results underscore the importance of 

not only the quantity, but quality, of care.

The Effects of Early Care and Education Programs for Preschool-Aged Children

A large literature indicates that preschool can benefit children’s school readiness and increase 

earnings and educational attainment later in life. Preschool is one of the most studied 

interventions, with an unusually deep research base beginning with randomized evaluations of 

well-known, but small, programs like Perry Preschool and Abecedarian that began in the 1960s 

and whose participants’ outcomes have been tracked well into adulthood. Much of what we 

know about the effects of larger-scale preschool programs comes from Head Start, the most 

widely available public preschool program for lower-income children. However, there is growing 

evidence from a number of new preschool programs, including state preschool programs in 

Georgia and Oklahoma and local initiatives in Chicago and Boston. Researchers have also 

collected results from numerous studies of smaller programs and used meta-analysis to discern 

general tendencies in impacts, thereby drawing more general conclusions from a large number 

of analyses.

The High/Scope Perry Preschool Study provided preschool to low-income African-Americans at 

high risk of failing in school in Ypsilanti, Michigan during the 1960s. Perry is one of the most wellknown preschool interventions in part because it was evaluated using a randomized trial yielding 

highly credible results, and also because data on its participants have been routinely collected 

longer than most other evaluations on any subject—until participants were 39 to 41 years old 

(Schweinhart, Barnes, and Weikart 1993).

Perry increased IQ scores at school entry, and other gains persisted while students were in school 

and into adulthood (Schweinhart et al. 2005). Through age 15, participants demonstrated higher 

motivation, placed a higher value on schooling, did more homework, and demonstrated higher 

achievement (Schweinhart and Weikart 1981). The program group scored better on several 

 

24 Baker et al. (2005); Lefebvre et al. (2006).

25 Bernal and Keane (2011); Herbst and Tekin (2010); Herbst and Tekin (2012).
21

cognitive and academic tests through age 27.

26 In addition to performing better on cognitive 

tests, educational attainment and labor market outcomes also improved among program 

participants. Participants’ high school graduation rates rose by about 17 percentage points, and 

when they entered the workforce, Perry participants had earnings about 25 percent higher than 

their control group counterparts through age 40 (Heckman et al. 2010a). Other observations of 

Perry participants later in life found similarly large increases in earnings ranging from 19 percent 

to nearly 60 percent.27

A larger-scale early childhood education intervention in Chicago found similarly positive results 

in both the short-term and long-term. Since 1967, the Chicago Child-Parent Centers (CPC) have 

provided comprehensive early childhood education and family supports to low-income children 

and parents. At kindergarten entry, CPC preschoolers’ cognitive readiness improved by about 

three months of learning. Math and reading achievement gains persisted through sixth grade 

(Reynolds 1995), and later evaluations found higher high school graduation and college 

attendance rates of CPC participants (Temple and Reynolds 2007). Due to the significant 

increases in educational attainment, participants in the CPC preschool program saw increases in

annual earnings measured in their late 20s of about 7 percent.28

In addition to the programs highlighted above, dozens of other programs have been rigorously 

examined since the 1960s. This body of research shows that test score gains are not unique to 

well-known programs like Perry and Abecedarian. A meta-analysis by Duncan and Magnuson 

(2013) shows the distribution of the treatment effects of 84 programs, including Head Start, 

Abecedarian, and Perry. Overall, across all studies and time periods, early childhood education 

increases cognitive and achievement scores by 0.35 standard deviations on average, or nearly 

half the black-white difference in the kindergarten achievement gap (Duncan and Magnuson 

2013). The estimated impacts in the studies considered in Duncan and Magnuson are illustrated 

in Figure 8, with bigger circles generally corresponding to studies that enrolled more children.

The figure shows that most programs benefit children’s cognitive development and achievement 

at the end of the program. 

 

26 Barnett (1996); Schweinhart (2003).

27 Bartik (2014); Karoly (1998); CEA calculations based on the percent increase in earnings of students in the 

program relative to similar students who were not in the program.

28 Reynolds et al. (2011); CEA calculations based on the percent increase in earnings of students in the program 

relative to similar students who were not in the program.
22

Figure 8 also illustrates that the positive effects of preschool are not confined only to small-scale 

boutique programs. Head Start, illustrated by the orange circles in the figure, has generally been 

shown to improve participants’ test scores measured at school entry. While these gains in 

cognitive ability and achievement may fade out (see the box on fadeout) over time as children 

progress in elementary school,29 Head Start appears to have direct impacts on longer term 

outcomes like higher educational attainment and earnings. For example, Deming (2009) found 

that Head Start increased high school graduation rates by 8.6 percentage points, increased 

college attendance rates by 6 percentage points, and reduced non-participation (in either 

education or employment) rates by 7 percentage points, with African-American participants 

experiencing the largest gains. Moreover, these increases in schooling translated into higher 

earnings: in their mid-20s, these participants’ earnings were 5 to 20 percent higher than nonparticipants.

30

Head Start has also been found to positively impact child outcomes beyond academic 

achievement and labor market success. In addition to providing early childhood education, Head 

Start offers parental support, nutritional assistance, and health services. These additional 

program components can also benefit children’s development. For example, Ludwig and Miller 

(2007) find that Head Start substantially reduced child mortality rates. The impacts of Head Start 

programs also spill over into the home environment; a recent study found that Head Start 

substantially increased parents’ involvement with their children, including time spent reading 

and doing math activities, during and even after enrollment (Gelber and Isen 2011). Researchers 

have concluded that adding all of these numerous benefits, the value of Head Start exceeds the 

program costs (Ludwig and Philips 2008).

The slight downward slope of the line in the figure shows that the magnitude of measured effects 

has slightly declined over time, with more recent studies showing slightly smaller impacts than 

earlier ones. This decline in average effect sizes over time may reflect either slightly less benefit 

 

29 Cicirelli (1969); McKey et al. (1985); Currie and Thomas (2000a, 2000b); Deming (2009); U.S. Department of 

Health and Human Services (2005, 2010).

30 Garces et al. (2002); Bartik (2014).

-0.5

-0.3

-0.1

0.1

0.3

0.5

0.7

0.9

1.1

1.3

1.5

1960 1970 1980 1990 2000 2010

Head Start

Non-Head Start

Figure 8: Most Early Childhood Programs Have 

Positive Cognitive and Achievement Impacts

Source: Duncan and Magnuson (2013); Weiland and Yoshikawa (2013).

Note: Circle sizes reflect the inverse of the squared study-level standard error. 74 of 83 studies 

showed positive effects, and CEA estimates that roughly 60 percent of estimates were 

statistically significant at the 10 percent level.

Average effect size in standard deviations
23

from the particular programs being evaluated, or slightly better options for children outside of 

the studied programs, including time spent with parents and in other center-based care. As 

mentioned earlier, parents across the income spectrum are spending more time with their 

children (Ramey and Ramey 2010), and the share of children in center-based care has risen since 

the first programs were evaluated.

31 Today, children are more likely to receive intensive 

investments by parents and are more likely to attend an alternate center-based program if they 

are not selected for the “treatment” group of a randomized experiment. Changes in the baseline 

counterfactual are important for comparing treatment effects. For example, a recent study of 

Head Start found that the program impacts were smaller in areas where more control group 

children enrolled in center-based care (Walters 2014).

 

31 Current Population Survey, 1968-2013 from Cascio and Schanzenbach (2013); CEA calculations.

WHY DO TEST SCORE EFFECTS FADE EVEN THOUGH THERE ARE LONG-TERM BENEFITS?

Many early childhood programs produce significant test score gains immediately after the

program. Some follow-up studies, however, find that these gains tend to fade over time as children

progress through elementary school (Cicirelli 1969; McKey et al. 1985; Currie and Thomas 2000a, 2000b;

Deming 2009; U.S. Department of Health and Human Services 2005, 2010). A meta-analysis of 62 highquality studies of early childhood initiatives found that test score gains decline by about 0.03 standard

deviations a year on average (Leak et al. forthcoming). There is significant debate about the underlying

causes of “fade-out.” In particular, some have suggested that preschool accelerates cognitive development

that would have happened anyway, and that students who don’t attend preschool eventually make up

ground. Others have argued that low-quality schooling or teaching towards the lowest-achieving students

in elementary school may slow growth that had been accelerated by early education programs (Currie and

Thomas 2000).

Cascio and Staiger (2012) show that some of the fade-out may reflect a statistical illusion from rescaling

test scores in terms of a student’s achievement relative to their peers. As children progress in schooling,

the range in achievement between the strongest and weakest-performing students increases. Therefore,

a standard deviation on a standardized test in high school represents a greater difference in achievement

than a standard deviation in elementary school. Because test scores are scaled and standardized,

mechanically, the effect of early interventions will appear to have smaller impacts on achievement scores

in later schooling years, even if there is no true fade-out.

Importantly, as this report describes, a growing evidence base shows that programs can generate

substantial long-run gains in educational attainment, earnings, and crime reduction, even where there is

fadeout in the interim (for example, see Heckman et al. 2010). The reemergence of long-run gains after

test score fadeout has been found even for initiatives that take place after preschool (see, for example,

Chetty et al. 2011 and Dynarski et al. 2013). This suggests that standardized tests may not fully capture all

of the relevant aspects of human capital relevant for the longer-term outcomes that are the important

goals of public investments. Research clearly demonstrates that while the skills measured by standardized

tests may fade (or converge), other skills important for long-term outcomes do not.
24

Early childhood programs, like many state preschool programs, can serve a broad population or 

a more narrowly-targeted population. Targeted interventions often focus on low-income 

children who are among the least likely to be enrolled in another preschool program without the 

intervention. Given that a universal program may provide services for children that would have 

been in private programs before, it is reasonable to expect that these programs would have 

smaller overall impacts. However, research shows that large state-run public preschool programs 

also generate large improvements in academic outcomes. Wong, Cook, Barnett and Jung (2008) 

examine five state-run pre-K programs and find large improvements on achievement test scores. 

Gormley et al. (2005) evaluate Oklahoma’s preschool program in Tulsa and find that children’s 

kindergarten achievement significantly improved. While it is too soon to directly estimate these

programs’ long term effects since the oldest participants have not yet entered the labor force, 

Hill, Gormley and Adelstein (2012) found some evidence of a persistent improvement in Tulsa’s 

impacts through third grade, and a recent evaluation of Oklahoma and Georgia’s state-run 

preschool programs found positive cognitive outcomes through fourth grade and persistent, 

though smaller effects, through eighth grade.32 This suggests that even when there are children 

that switch from private programs—“crowd-out”—there are still gains, perhaps because families 

can use the savings to make other positive investments in their children.

 

32 Gormley and Gayer (2005); Fitzpatrick (2008).
25

The “Active Ingredients” in Successful Early Childhood Programs

Early childhood education takes many forms as programs differ in the student populations

served, and in programmatic features like their curricula, teachers, class sizes, and program 

durations. As noted above, while generally positive, the gains from early childhood education 

programs vary widely even across centers implementing the same type of program like Head 

BENEFITS OF EARLY CHILDHOODEDUCATION PROGRAMS FOR GOVERNMENT AND SOCIETY

Tax Revenue Increases and Transfer Payment Decreases Due to Higher Earnings

Increased child and maternal earnings and employment translate into increased tax revenue and lower

transfer payments. Abecedarian participants’ lifetime earnings increased by about $44,000, and their

mothers’ lifetime earnings increased by more than $79,000. These earnings gains reduced cash assistance

payments by about $220 per participant, assuming a 3 percent discount rate (Masse and Barnett 2007;

2014 dollars). Likewise, the Chicago Child-Parent Centers, Abecedarian Project, and Perry Preschool all

generated revenue increases and transfer payment decreases.

Remedial Education and Education System Savings

Early childhood education can also benefit society by reducing the likelihood that students need remedial

education. Remedial education can consist of repeated grades or specialized schooling, and the additional

cost of this extra schooling can be expensive. Abecedarian participants experienced lower rates of grade

retention and special education placements (Campbell and Ramey 1995; Temple and Reynolds 2007),

saving more than $11,000 per participant through grade 12. Likewise, CPC lowered grade retention and

special education placements through age 12 (Reynolds 1995; Reynolds and Temple 1995; Reynolds et al.

1995). Perry participants were less likely to be retained or place in special education classes (Temple and

Reynolds 2005). Head Start results also indicate the program will reduce rates of special education and

grade repetition (Currie 2001).

Reduced Involvement with the Criminal Justice System

Early childhood interventions can also reduce involvement with the criminal justice system. A number of

programs with long-run follow-ups, such as Perry, CPC preschool, Abecedarian, and Head Start, found the

programs reduced juvenile arrests and criminal records of participants (Anderson 2014; Reynolds et al.

2001, 2002; Belfield 2006; Heckman et al. 2010; Carneiro and Ginja 2014). Many cost-benefit analyses find

that these cost savings are substantial, and often account for the single largest portion of the accrued

benefits over time.

Improvements in Health

Early childhood interventions can also benefit society by improving health outcomes for participants,

thereby reducing public expenditures on health care, or lowering insurance premiums for private health

coverage. The CPC preschool program significantly reduced child maltreatment rates(Temple and Reynolds

2005). Head Start also improved participant health: Deming (2009) found that Head Start participants were

7 percentage points less likely to be in poor health, and over the longer-term, Head Start participants have

fewer health problems and males had lower obesity rates at ages 12 and 13 (Carneiro and Ginja 2014).
26

Start (Walters 2014). This section summarizes what research shows about several policy options 

that might affect program quality and be associated with the biggest impacts on child outcomes.

Curriculum

Early education curricula can focus on social and emotional development (non-cognitive skills),

math and reading (cognitive skills) or a combination of both. Some researchers argue that early 

childhood education should focus on building reading and math skills since gaps between highand low-income children at kindergarten and fifth grade are largest for cognitive skills. Moreover, 

early academic skills in math and reading are the most predictive of later academic 

achievement.

33 However, other researchers have argued that non-cognitive skills are at least as 

important for later life outcomes as cognitive skills (Heckman et al. 2006). These researchers 

argue that investments in both non-cognitive skills and cognitive skills are best made in early

childhood (Heckman and Mosso 2014). Regardless of the curricula’s focus, effective curricula can 

help build both cognitive and non-cognitive skills and the most effective programs build on 

previous skills, rather than repeating programming for children who enroll for subsequent years.

Program Duration

Some studies have shown that more hours of education when children are young can improve 

academic achievement and help increase parental labor force attachment. Full-day programs 

have become much more common since the mid-1990s, and in the last few years, full-day 

programs have become roughly as common as half-day programs (Figure 9). Just over half of 

three- and four-year-olds enrolled in preschool are in half-day programs, while almost a quarter

of children in kindergarten are enrolled in half-day programs.34

Programs with longer school days can improve student outcomes by increasing the amount of 

learning time. In a randomized experiment, children in full-day preschool improved almost twice 

 

33 Duncan et al. (2007); Duncan and Magnuson (2009); Duncan and Magnuson (2011).

34 CEA calculation using 2013 October Current Population Survey. Preschool includes three- and four-year-old 

children; kindergarten includes four- to six-year-old children.

0

5

10

15

20

25

30

1968 1972 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013

Figure 9: Prevalence of Full-Day Enrollment Rises 

Percent Among 3 and 4 Year-Olds: 1968-2013

Half-Day

Full-Day

Source: Current Population Survey, October Supplement, 1968-2013; Cascio and 

Schanzenbach (2013); CEA calculations.

Note: Enrollment data include preschoolers and kindergarteners. Data show 3-year centered 

moving averages. Breaks in series are due to 1994 CPS redesign.
27

as much on vocabulary and math tests as children in half-day programs over the course of the 

program (Robin et al. 2006). Likewise, an analysis of the different centers in the Head Start Impact 

Study found that full-day programs boosted cognitive achievement by 0.14 standard deviations 

above those in half-day programs (Walters 2014). A partial expansion of the Chicago Child-Parent 

Centers to full-day programs led to significant improvements in children’s socio-emotional 

development, language and math skills, and physical health relative to children in the part-day 

CPC program (Reynolds et al. 2014). Likewise, Gibbs (2014) finds that full-day kindergarten, 

relative to half-day, improves literacy skills by approximately 0.3 standard deviation, with 

Hispanic students and students who began the year with low literacy skills experiencing the 

largest gains. This implies that more time in school would be especially beneficial for children 

who are farthest behind, and could help close the early achievement gap and improve students’ 

outcomes later in life. 

There is also some evidence that an expanded school day would boost the labor supply of parents 

of young children by helping parents obtain full-time employment. A study found that full-day 

kindergarten increased the probability that mothers worked full-time by 17 percent compared 

to half-day kindergarten (Cannon et al. 2006), with low-income mothers experiencing the largest 

increases in full-time employment.

Teacher Quality and Professional Development 

Providing teachers with coaching or mentoring programs is one way to improve curriculum 

implementation and support high-quality student-teacher interactions and, as a result, improve

student outcomes (Halle et al. 2011). Some of the most successful curricula include intensive 

professional development for teachers, which can include frequent coaching sessions with 

feedback and support from an expert teacher (Yoshikawa et al. 2014). The recent Boston 

preschool program, already shown to be effective in improving cognitive skills and executive 

functioning, uses a curriculum focused on building cognitive skills that is facilitated by intensive 

professional development. Teachers are provided with manuals on how to prepare and teach 

each daily lesson, and they receive educational supports to fully implement the curriculum, 

including materials and facilities for all activities and assistance from a full-time aide. Teachers 

and aides receive intense coaching and professional development, including training over the 

summer and several hours each month, working with coaches who are experienced in early 

childhood education (Duncan and Murnane 2014). This intensive professional development is 

one of the more unique elements of the highly successful Boston program, and a small body of 

literature suggests that this kind of coaching can be an important component of a highly 

successful preschool program. A number of other preschool curriculum interventions employ 

coaching as a strategy to improve the quality of teacher-child interactions.35 Recent reviews of 

the literature on coaching have also found promising results, although few experimental studies 

have been conducted.

36

 

35 Bierman et al. (2010); Clements and Sarama (2008).

36 Tout et al. (2011); Zaslow et al. (2010); Aikens and Akers (2011).
28

ADMINISTRATION PROPOSALS TO INCREASE INVESTMENTS IN EARLY EDUCATION

President Obama has proposed a comprehensive early learning agenda to ensure the best start in life for

every American child. These proposals include expanding evidence-based home visiting programs, growing

the supply of effective early learning opportunities for infants and toddlers, helping families afford highquality child care, and providing high-quality preschool for every child.

The Administration’s Preschool for All proposal, first proposed in 2013, would create a federal-state

partnership to provide all low- and moderate-income four-year-old children with high-quality preschool,

while also expanding these programs to reach additional higher-income children and to establish and

expand full-day kindergarten programs. This landmark proposal is complemented by expansions to

evidence-based, voluntary home visiting programs and the launch of a new Early Head Start- Child Care

Partnership program to provide younger children a solid foundation in the earliest years of life. Home

visiting programs provide a continuum ofsupport for children before they enter preschool, by empowering

parents and connecting families to services and educational supports that improve children’s health,

development, and ability to learn. Early Head Start-Child Care Partnership grants will support states and

communities in expanding and enhancing learning opportunities for infants and toddlers, while supporting

working families through full-day, full-year services. In addition, thirty-five states have submitted

applications for Preschool Development Grants. These grants will enhance preschool program

infrastructure and expand high-quality programs that can serve as a model for further expansion to fouryear-olds from low- and moderate-income families.

Recognizing that high-quality child care is unaffordable for many families, the President has also proposed

expanding access to high-quality child care through the Child Care and Development Fund and the Child

and Dependent Care Tax Credit. The 2014 reauthorization of the Child Care and Development Block Grant

Act, passed with bipartisan support, will ensure that the nearly 1.5 million children who currently receive

care through the CCDF are cared for in safe and nurturing environments. In addition, President Obama’s

2015 Budget proposed increasing the Child Care Tax Credit for families with young children, who face the

highest child care costs. At the same time child care costs have increased faster than the cost of living, the

existing Child Care Tax Credit has lost its purchasing power. About 1.7 million families would benefit from

the proposed expansion in 2015, and these families would receive an average tax cut of $600.
29

III. Cost-Benefit Analysis of Preschool Programs

Researchers have applied cost-benefit analysis to numerous preschool programs in order to 

determine whether they provide a positive return on the initial investment. Across a range of 

programs, researchers have concluded that early education programs pay for themselves and 

generate a net return on investment.

In particular, several “model” programs begun in the 1960s and 1970s that targeted low-income 

students have been rigorously evaluated, and ongoing data collection efforts enable direct 

assessments of long-term benefits. After adding the benefits and costs over a child’s lifetime for

both the child and society, including higher levels of education, increased earnings in adulthood, 

improved health, reduced need for special education placements and remedial education, 

reduced crime, increased tax revenue, and lower spending for anti-poverty programs, 

researchers found that the benefits generated by these programs well exceed the costs.

37

One recent study by Nobel Prize winner James Heckman and coauthors that stands out for its 

rigor found that for every dollar spent on the Perry Preschool program, the benefits totaled $7 

to $10, with a baseline estimate of $8.60 (Heckman et al. 2010b). Participants’ earnings, which

were about 25 percent higher each year compared with nonparticipants, generated a sizable 

return over individuals’ lifetimes. Non-earnings benefits of reduced transfer payments and 

remedial education expenditures alone generated a benefit of more than $4 for every dollar 

spent according to the Heckman estimates. Since participants were also less likely to be involved 

with the criminal justice system, this led to further benefits in the form of reduced victimization 

and less spending on police, courts, and prisons. The Heckman study argues that early education 

is one of the most cost-effective ways of reducing crime, and estimates that Perry saved an 

additional $3 to $8 in crime costs for every dollar spent. Other studies find similarly large overall 

benefits (earnings plus social benefits) from a variety of preschool programs, including 

Abecedarian and the Chicago Child-Parent Centers.

38 For example Masse and Barnett (2007) 

found that Abecedarian generates benefits of nearly $3 for each dollar spent, and Reynolds et al. 

(2011) found that the CPC preschool program generates nearly $11 for each dollar spent.

The following section reviews cost-benefit studies for larger-scale programs. While 40 states and 

the District of Columbia have state-sponsored preschool programs, Georgia and Oklahoma offer 

examples of high-quality preschool education with broad access, and are often viewed as models

for the rest of the country. A number of studies have focused on the Tulsa school district, an early 

leader in universal preschool. These programs, along with Head Start, arguably provide the most 

relevant evidence on the likely effects of the President’s proposed early learning initiatives.

 

37 Rolnick and Grunewald (2003); Belfield et al. (2006); Heckman et al. (2010b).

38 Reynolds et al (2002); Belfield and Schwartz (2006).
30

Estimating the Benefits of Spending on Early Childhood Programs

A number of researchers have examined more recent broad-based programs that have expanded 

access to a much larger group of children, including state preschool programs and Head Start. 

Many of these early evaluations have examined how the benefits from higher participant 

earnings compare with the cost of the early childhood program. Students that attended state 

preschool such as those in Georgia and Oklahoma are not yet old enough to directly measure 

earnings; however, researchers have used achievement gains to estimate that adult earnings for 

these children will likely increase by 1.3 to 3.5 percent (Cascio and Schanzenbach 2013).39 Other 

studies have found similar estimates.

40 Summing the value of increased future earnings over the 

average participant’s lifetime from these programs implies that there are substantial benefits for 

each child, likely at least $1.60 to $5.90 in benefits for every $1 spent. As evaluations of smaller 

programs like CPC have found benefits as high as $11 when including the non-earnings benefits, 

the range of benefits shown in Table 1 should be regarded as conservative estimates. For 

illustrative purposes, Table 1 shows the breakdown between earnings gains and other benefits 

from the Perry Preschool Program. Evaluation of this program finds $4.39 in benefits from 

earnings and another $4.20 from the additional benefits beyond earnings. That suggests that the 

benefit estimates using earnings alone may only capture half of the overall benefits. The results 

from each of the studies are summarized in Table 1.

Table 1: Summary of Cost-Benefit Studies

Tulsa FullDay 

Preschool

Tulsa 

Half-Day 

Preschool

Oklahoma 

& Georgia 

Preschool

Head 

Start

Perry 

Preschool

Year children entered program 2005 2005 1995/98 2002 1962

Value of earnings gains per child $27,897 $16,683 $24,094 $14,459 $92,020

Value of total benefits per child $180,257b

Cost of program per child $9,118 $4,559 $4,086 $9,173 $20,948

Net benefit per child $18,779 $12,124 $20,008 $5,286 $159,309b

Benefit to cost ratio (earnings only) 3.06 3.66 5.90 1.58a 4.39

Benefit to cost ratio (all benefits) – – – – 8.60b

Study Bartik 

et al. 

(2012)

Bartik 

et al. 

(2012)

Cascio 

et al. 

(2013)

Duncan 

et al. 

(2010)

Heckman 

et al. 

(2010b)

Note: All figures in 2014 dollars. For the present value of earnings, all studies use a 3 percent discount rate 

and assume no real productivity growth except for Cascio and Schanzenbach (2013), who use a 3.4 percent 

discount rate and a 1.9 real productivity growth rate. Figures are middle estimates when studies present a 

range. In particular, the figures for Cascio and Schanzenbach (2013) are the average of estimates using 4th 

and 8th grade test scores.

a The estimate from Duncan et al. (2010) likely understates the increase in earnings due to Head Start. See text 

and footnote 41 for details.

b

Includes benefits from earnings, reduced crime, reduced receipt of cash transfers, and educational savings.

 

39 Studies generally use increases in test scores to predict the future increase in earnings using estimates from Chetty, 

Friedman, Rockoff (2013) or Krueger (2003).

40 Bartik et al. (2012); Duncan et al. (2010).
31

In all of the studies of recent programs, the lifetime earnings gains from these programs well 

exceed the cost, implying a net benefit between $5,000 and $20,000 per child. In particular, 

studies find that universal state preschool yields a return of $3 to $6 for every $1 invested. Head 

Start also yields a positive return. Many studies have shown that Head Start leads to larger 

achievement gains than those used to calculate the earnings benefits in Duncan et al. (2010); 

using the average earnings impact from the 33 studies of Head Start featured in Duncan and 

Magnuson’s (2013) meta-analysis implies a benefit-cost ratio about 50 percent higher than 

reported in the table above.

41

While recent early childhood programs all show substantial benefits per dollar spent over a range 

of possible scenarios, it is important to keep in mind that students in recent programs are still 

relatively young and have not entered the labor market. Without direct information on 

participant earnings and other long-term benefits, there is some uncertainty regarding the exact 

level of total benefits that will accrue over children’s lifetimes. Like Perry Preschool, the Chicago 

Child-Parent Centers, and Abecedarian, high-quality public preschool programs will likely reduce 

the need for remedial education, reduce crime, lower spending on anti-poverty programs, and 

improve health. These programs also provide child care, allowing parents, particularly mothers, 

to maintain their attachment to the workforce and increase earnings in both the short-term and 

through their careers, as mothers who are able to work while their children are young are more 

likely to work and earn more later in life.42 In their study of Perry Preschool, Heckman et al. 

(2010b) account for some of these benefits and find that they are about as large as the earnings 

gains (Table 1). For this reason, the full benefit of universal early childhood education may be 

significantly larger than the estimates based solely on the earnings gains in the table above.

Early Childhood Education as a Long-Term Investment

Although studies find that early childhood education yields a large return, the payoff takes time 

to materialize as benefits are realized through behavior or earnings changes over an individual’s 

lifecycle. When a child attends an early education program there is an upfront cost. Some 

benefits are realized immediately—for example, parents who choose to re-enter the labor force 

are able to earn higher wages right away. However, the majority of benefits, from reduced crime 

to higher earnings, accrue later in life. In the case of Perry Preschool, evidence on long-term 

outcomes suggests that the largest benefits were realized when children were in their late 20s 

(Figure 10).

 

41 Duncan et al. (2010) use estimates of Head Start’s test score impacts from Ludwig and Phillips (2007) to predict 

earnings. The test score impact they use, 0.12 standard deviations, is smaller than the average test score impact of 

Head Start in Duncan and Magnuson’s (2013) analysis of 0.19 standard deviations (weighted by the precision of the 

estimate). Most of the average effect sizes for Head Start in Duncan and Magnuson (2013) are larger than 0.12 

standard deviations (23 out of 33).

42 For instance see Lefebvre, Merrigan, and Verstraete (2009) on dynamic labor supply effects.
32

Although it took time for the benefits of Perry preschool to appear, the benefits quickly 

outweighed the initial cost in present value terms and continued to accrue throughout the child’s 

lifetime. The net benefit continued to grow for the rest of the participant’s life. The timing of 

benefits for modern universal programs will likely follow a similar lifecycle pattern.

Given the substantial benefits in the form of higher earnings, investing in early childhood 

education would likely boost GDP in the long-run. If all families enrolled their children in 

preschool at the same rate as high-income families, enrollment would increase by about 13

points.

43 Using estimates from the preschool programs in Georgia and Oklahoma alone, the 

earnings gains alone resulting from increased enrollment would raise the level of GDP by 0.16 to 

0.44 percent per year in the long-run.44 This is equivalent to adding between $28 and $74 billion 

per year based on current GDP.45 This estimate does not include the gains to GDP that would 

result from earnings gains for parents and the many non-earnings benefits of quality preschool 

education, including expanded economic activity due to reduced crime and possible spillovers to 

other workers who did not directly benefit from the program. 

 

43 In 2013, about 71.7 percent of four-year-olds from families with income of $100,000 or more are in preschool, but 

only 59 percent of the overall population (Current Population Survey, October Supplement). Thus about 12.7 percent 

of each cohort would be affected.

44 Cascio and Schanzenbach (2013) estimate that these programs increase earnings by 1.3 to 3.5 percent. The longrun here is defined as 60 years, by which point the labor force would reflect these higher levels of enrollment.

45Under this scenario, 12.7 percent of each cohort’s earnings will increase by 1.3 to 3.5 percent per year, yielding 

an increase in aggregate earnings of 0.16 percent to 0.44 percent. Using 2013 GDP ($16.77 trillion), this yields an 

increase of $27.62 to $74.36 billion per year.

-$25,000

-$15,000

-$5,000

$5,000

$15,000

$25,000

$35,000

$45,000

$55,000

0 to 10 11 to 20 21 to 30 31 to 40 41 to 50 51+

Earnings

Program 

Cost

Note: CEA estimates based on Heckman et al. (2010) using a discount rate of 3 percent. 

Additional benefits, such as health benefits and maternal earnings, have not been quantified.

2014 $ 

Figure 10: Net Benefit Per Child of Perry Preschool Rises 

Over the Lifecycle

Years Since Start of Program

Lower 

Crime

Savings on 

Education

Savings on Social 

Program Use
33

Conclusion 

Parents and researchers understand that early childhood is a critical developmental period that 

affects outcomes far into adulthood. Parents are making more investments in their young 

children, in terms of both time and resources. Research is providing more insights into how to 

create strong foundations for children’s development, as well as why the best investments work 

so well. Yet not all American families can access high-quality early childhood care. Expanding 

access to high-quality care can help parents give children the start in life they desire for them. 

Greater access can also help parents work, leading to higher household incomes with which to 

invest in their children. 

As this report has demonstrated, high-quality early childhood education programs offer longterm benefits that far outweigh costs. Interventions that occur very early in childhood, like home 

visiting programs for mothers with new infants, as well as high-quality early care and education, 

improve kindergarten readiness, which itself predicts success in later schooling. Studies in the 

U.S. and a number of other countries show that access to quality child care can help mothers 

participate in the labor force and, when subsidies for care are available, can boost family income. 

High-quality preschool programs for three- and four-year-old children can also build a strong 

skills foundation for school, as well as help meet child care needs of working parents. This 

programming already exists in 40 States and the District of Columbia, though less than one third 

of four-year-olds have access to state preschool programs and the characteristics of programs 

vary across states. Researchers estimate that the skills gains demonstrated in these large public 

programs, such as those in Oklahoma and Georgia, will lead income gains of 1.3 to 3.5 percent 

each year when children are adults. Over a child’s career this implies higher earnings in net 

present value of $9,166 to $30,851 after subtracting out the cost of the program. If we expand 

access throughout the country and all families were able to enroll their children in preschool at 

the same rate as high-income families, enrollment would increase nationwide by about 13 

percentage points and yield net present value of $4.8 billion to $16.1 billion per cohort from 

earnings gains alone after accounting for the costs of the program. In the long run, these earnings 

gains translate into an increase in GDP of 0.16 to 0.44 percent. 

The later life earnings gains for children who enroll in preschool programs have been shown to

far exceed their cost.

When we invest in early childhood programs, it is not just enrolled children and their families 

who benefit. The research highlighted here suggests that the investments we make in children 

today could benefit our economy in the long-run by expanding our skilled workforce and 

increasing their earnings. Higher adult earnings for participating children means society gets all 

the benefits of a better educated, higher earning population in the future—including lower 

transfer payments, reduced involvement with the criminal justice system, healthier citizens, and 

a larger revenue base. Expanding access to quality early childhood programs offers a win-winwin opportunity for program participants, their parents, and society as a whole. It’s time to build 
34

on demonstrated successes in this area and make them more widely available so more American 

families and communities can benefit.
35

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