Investing in Kids: Early Childhood Programs and Local Economic Development

1. Introduction

1 1 Introduction This book presents arguments for the following propositions: Local1 economic development strategies in the United States should include extensive investments in high-quality early childhood programs, such as prekindergarten (pre-K) education,2 child care, and parenting assistance . Economic development policies should also include reforms in business tax incentives. But economic development benefits—higher earnings per capita in the local community—can be better achieved if business incentives are complemented by early childhood programs. Economic development benefits can play an important role in motivating a grassroots movement for investing in our kids. I first became involved with early childhood policy in May of 2005, when I was contacted by a vice president for the Committee for Economic Development (CED). CED is a national organization of business executives and university presidents that sponsors research and takes positions on policy issues. CED tends to take “centrist” positions. As I was to discover later, CED’s work on early childhood issues was largely funded by the Pew Charitable Trusts, a large national foundation headquartered in Philadelphia. Pew had decided to get involved in promoting the greater availability of high-quality pre-K education in the fall of 2001. Pew soon moved into a national leadership role in promoting pre-K expansion. As David Kirp, professor of public policy at the University of California, Berkeley, says in his book The Sandbox Investment, “Ever since the Pew Charitable Trusts made preschool a priority, the foundation has largely masterminded the national early education agenda” (Kirp 2007, pp. 174–175). Pew has provided much of the funding for the National Institute for Early Education Research at Rutgers University, and for the advocacy group Pre-K Now. After several years of focusing its efforts on pre-K education, Pew has expanded to encompass a broader set of early childhood programs. According to Pew staff, political support for early childhood programs is enhanced by evidence that these programs provide business or economic benefits: “One very successful part of the early education 2 Bartik message that resonates with a variety of important audiences,” say Pew staff Urahn and Watson (2006), “has been the macroeconomic benefits prekindergarten offers to the communities and states that invest in early education. This message has generated substantial interest from advocates , policymakers, and business leaders, helping them understand the value of early education in a new light.” Therefore, Pew has funded research that explores different ways of measuring the economic or business return to pre-K education. In the past several years, Pew has also funded research on the economic returns to other early childhood programs. This Pew research funding includes my 2005–2006 research on the economic development effects of universal pre-K education, my 2007–2008 research on the economic development effects of other early childhood programs, and now this book, which summarizes and expands on this earlier work.3 When I was contacted in 2005, CED’s request was to “compare the net benefits/rate of return to prekindergarten programs with alternative state and local economic development investments (such as sports stadiums, business parks, facilities relocation, and the like).” The committee mentioned that it had contacted me because “much of your work focuses on economic development.” My previous work in this area includes a 1991 book on the distributional effects of economic development programs, and research publications on the effects of taxes and public services on business location decisions, and on how to evaluate local economic development programs. As I reflected on CED’s request, I decided it made more sense if modified. This research seeks to be relevant to the concerns of political and business leaders interested in local economic development. To achieve this relevance, we need to consider effects of prekindergarten programs that are similar in character to the effects of economic development programs. For example, one of the most important benefits of some high-quality pre-K programs is the resulting reduction in crime when the children get older. Crime reduction is of interest to police chiefs and to voters in general. But crime reduction is not the primary goal of economic development programs. Rather, these programs seek to create jobs and earnings for local residents. If there is any case to be made for pre-K programs as “economic development programs,” then pre-K programs need to provide “economic development benefits.” These benefits are increased jobs or earnings for local residents. Introduction 3 Ironically...