Investments in Young Children Robert Grunewald

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    Rob Grunewald

    Federal Reserve Bank of Minneapolis

    Investments in Young Children:

    The Economic Case and

    How to Fund

    July 18, 2011

    CCSSO Summer Institute

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    Investments in Young Children:

    Economic Case and

    How to Fund

    Early childhood development is economic development

    Early investments yield a high public return

    States use a variety of funding sources

    Education chiefs play key role in moving agenda forward

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    Investments in Young Children:Economic Case and

    How to Fund

    Early childhood development is economic development

    Early investments yield a high public return

    States use a variety of funding sources

    Education chiefs play key role in moving agenda forward

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    0.0

    0.2

    0.4

    0.6

    0.8

    1.0

    1.2

    2000-10 2010-15 2015-20 2020-25 2025-30 2030-35 2035-40 2040-45 2045-50

    Average

    annualperc

    entchange

    U.S. Population Projections,

    Ages 15 to 64

    Source: U.S. Census Bureau, Population Division

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    0.0 0.5 1.0 1.5 2.0

    Short-term OTJ training

    Moderate-term OTJ

    training

    Long-term OTJ training

    Work experience inrelated occupation

    Postsecondary vocational

    award

    Associate degree

    Bachelor's degree orhigher

    Average annual percent change

    Occupation Growth by Primary Source of

    Education and Training, 2008 to 2018

    Source: U.S. Bureau of Labor Statistics, Employment Projections Program

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    $0 $20,000 $40,000 $60,000 $80,000

    Short-term OTJ training

    Moderate-term OTJ training

    Long-term OTJ training

    Work experience in related occupation

    Postsecondary vocational award

    Associate degree

    Bachelor's degree or higher

    Average annual wages of new jobs based on median 2008 wages

    Average Annual Wages of New Jobs by Primary

    Source of Education and Training, 2008 to 2018

    Source: U.S. Bureau of Labor Statistics, Employment Projections Program

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    Investments in Young Children:Economic Case and

    How to Fund

    Early childhood development is economic development

    Early investments yield a high public return

    States use a variety of funding sources

    Education chiefs play key role in moving agenda forward

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    Human Brain DevelopmentSynapse Formation Dependent on Early Experiences

    FIRST YEAR

    -8 -7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

    Birth (Months) (Years)

    Sensory Pathways(Vision, Hearing)

    LanguageHigher Cognitive Function

    Source: Nelson (2000)

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    HumanBrain

    at Birth

    6 Years Old14 Years

    Old

    Source: Chugani, Phelps & Mazziotta (1987)

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    Barriers to Social Mobility Emergeat a Very Young Age

    16 mos. 24 mos. 36 mos.

    CumulativeVocabula

    ry(Words)

    College EducatedParents

    Very Low-IncomeParents

    Childs Age (Months)

    200

    600

    1200

    Source: Hart & Risley (1995)

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    High/Scope Study of Perry Preschool In early 1960s, 123 children from low-income

    families in Ypsilanti, Mich.

    Children randomly selected to attend Perry orcontrol group.

    High-quality program with well-trained teachers,daily classroom sessions and weekly home

    visits.

    Tracked participants and control group throughage 40.

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    Perry: Educational Effects

    0% 25% 50% 75% 100%

    Didn't requirespecial education

    Graduated from highschool on time

    Age 14 achievementat 10th percentile+

    Program group No-program group

    Source: Schweinhart, et al. (2005)

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    Perry Preschool

    Costs and Benefits Over 62 Years

    -$20,

    000

    $20,

    000

    $60,

    000

    $100,

    000

    $140,

    000

    Welfare Payments

    Crime Victims

    Justice System

    Higher Participants' Earnings

    K-12 Ed

    Program Cost

    For Public For Participant

    Source: Schweinhart, et al. (2005)

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    Perry PreschoolEstimated Return on Investment

    Benefit-Cost Ratio = $16 to $1

    Annual Rate of Return = 18%

    Public Rate of Return = 16%

    Heckman Reanalysis = 10%

    Sources: Schweinhart, et al. (2005); Authors calculations; Heckman, Moon,

    Pinto, Savelyez, & Yavitz (2010)

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    Five-State Pre-K EvaluationEstimated size of intent-to-treat effect

    -0.2

    0.0

    0.2

    0.4

    0.6

    0.8

    1.0

    1.2

    Michigan New Jersey SouthCarolina

    West Virginia Oklahoma

    Vocabulary (PPVT) Math Print Awareness

    *Significant at 5% Source: Wong, V. C., Cook, T. D., Barnett, W. S., & Jung, K. (2008)

    *

    *

    **

    *

    *

    *

    **

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    Lessons Learned from Research Invest in quality

    Involve parents

    Start early

    Reach at-risk population

    Bring to scale

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    Investments in Young Children:Economic Case and

    How to Fund Early childhood development is economic development

    Early investments yield a high public return

    States use a variety of funding sources

    Education chiefs play key role in moving agenda forward

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    Funding Pre-K

    General revenue

    School funding formula At least 11 states and D.C.

    Community programs can provide preschool

    Designated sales or excise tax South Carolina and Denver: Sales tax

    California and Arizona: Cigarette tax

    Lottery Georgia raises about $300 million

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    Set aside Pre-K funds for ages 0 to 3

    Illinois and Kansas

    Endowment Nebraska, $60 million

    Public-Private Partnerships

    Smart Start (North Carolina) Smart Beginnings (Virginia)

    Minnesota Early Learning Foundation

    Funding Prenatal to Age 3

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    Investments in Young Children:

    Economic Case and

    How to Fund Early childhood development is economic development

    Early investments yield a high public return

    States use a variety of funding sources

    Education chiefs play key role in moving agenda forward

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    Roles for Education Chiefs Advocate for early childhood funding

    Partner with Human Services and Health Departmentsto improve program quality

    Encourage schools to partner with child care, Pre-Kand Head Start to improve transition to kindergarten

    Apply for Early Learning Challenge funds to build astronger state early learning system

    Promote partnerships with the private sector

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    Sources

    Chugani, H.T., Phelps, M.E., & Mazziotta, J.C. (1987). Positron emission tomography studyof human brain functional development.Annals of Neurology22, 487-497.

    Hart, B., & Risley, T.R. (1995). Meaningful Differences in the Everyday Experience of Young American Children.

    Baltimore: Paul H. Brooks Publishing Co.

    Karoly, L.A., Greenwood, P.W., Everingham, S.S., Hoube, J., Kilburn, M.R., Rydell, C.P., et al. (1998). Investing in OurChildren: What We Know and Dont Know About the Costs and Benefits of Early Childhood Interventions. Santa Monica,Cal.: RAND Corporation.

    Masse, L.N., & Barnett, W.S. (2002).A Benefit-Cost Analysis of the Abecedarian Early Childhood Intervention. NewBrunswick, N.J.: National Institute for Early Education Research.

    Heckman, J. J., Moon, S.H., Pinto, R., Savelyez, P., & Yavitz, A. (2010). The Rate of Return to the HighScope PerryPreschool Program. Journal of Public Economics94(1-2), 114-28.

    Minnesota Early Learning Foundation. www.melf.us.

    Nelson, C.A. (2000). The Neurobiological Bases of Early Intervention. In J.P. Shonkoff & S.J. Meisels (Eds.), Handbook ofEarly Childhood Intervention, second edition (204-227). Cambridge, Mass.: Cambridge University Press.

    Reynolds, A.J., Temple, J.A., Robertson, D.L., & Mann, E.A. (2002) Age 21 Cost-Benefit Analysis of the Title I ChicagoChild-Parent Centers. Educational Evaluation and Policy