# **1. Introduction**

A growing body of research shows that a child’s early life has consequences for their educational outcomes (A.T. Bhutta et al., 2002, L. M. Brennan et al., 2012, G. Duncan et al., 2007, L. Feinstein and K. Duckwork, 2006, E. Melhuish, 2011, E.C. Melhuish et al., 2008, S. E. Moser et al., 2012), health outcomes (C. Hertzman, 2013, J.W. Lynch and G. Davey-Smith, 2005), and social outcomes (T.E. Moffitt et al., 2011) later in their adult years. Healthy child development is an enabler of human capability allowing children to reach physical maturity and participate productively in economic, social and civic life (G. Conti and J. Heckman, 2012, Amartya Sen, 1999). Many of the problems arising in early childhood have associated social and financial costs that cumulatively represent a considerable drain on a country’s resources (L. Feinstein and K. Duckworth, 2006, C.G. Victora et al., 2008). There is increasing realization that opportunities for interventions must be based on a sound understanding of the early pathways toward later human capital and capability (J.P. Shonkoff and D. Phillips, 2000).

Preschool programs provide a chance to mitigate the risk factors that many children face (W.S. Barnett, 2011, G. Duncan, A. Claessens, A. Huston, L. Pagani, M. Engel, H. Sexton, C. Dowsett, K. Magnusson, P. Klebanov, L. Feinstein, J. Brooks-Gunn and K. Duckworth, 2007, G. Duncan and K. Magnuson, 2013, J. Heckman, 2006).The impacts are likely to be greater for children growing up in middle- and low- income countries (P.L. Engle et al., 2011). The evidence on the effectiveness of preschool programs and the mechanisms behind causal pathways is growing (G. Duncan and K. Magnuson, 2013, J.P. Shonkoff, 2014). The vast majority of research on preschool approaches to support early child development has been focused on three “iconic” projects: Perry Preschool, Abecedarian, and the Nurse Family Partnerships (J.P. Shonkoff, 2014). These studies were begun in America with small sample sizes in the late 1960s to early 1970s, although all have had longitudinal follow-ups. Unfortunately there are fewer high quality studies evaluating early childhood care and education interventions outside of the US. However, of those that do exist, the results seem range from no effect in some settings (Bouguen, Filmer, Macours and Naudeau, 2013) to positive effects in others (K. Burger, 2010, S. Martinez, S. Naudeau and V. Pereira, 2012, M. Nores and S. Barnett, 2010). .

In this paper we analyze the impact of expanding access to community-based early childhood services – specifically playgroups – in rural Indonesia under the Early Childhood Education and Development Project, using experimental and quasi-experimental methods. This project provided selected communities with the services of a community facilitator to raise community awareness on the importance of child development. In addition, communities received block grants (USD 18,000 over 3 years) to establish or strengthen preschool services of their choosing to cater to children between the ages of 0-6. The overwhelming majority of communities chose to establish playgroups – group programs typically intended for children between the ages of 3 and 6. Most communities (79%) established new services. The project also included 200 hours of training for individuals from the community who were selected to be teachers. The project was implemented in 3,000 villages in 50 districts across Indonesia.

We employ two comparisons in our analysis. The first comparison is experimental and takes advantage of the fact that the project was rolled out in three batches and that villages were assigned to batches by lottery. This allows us to compare villages that received block grants in the first batch (Batch 1) with those that received block grants in the last batch (Batch 3) using the randomized phase-in of villages into the project as an instrumental variable (IV). This comparison 2