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Why economists support early childhood education investment

Published on: May 01, 2005

f planning for one year, plant rice.
If planning for ten years, plant a tree.
If planning for one hundred years, teach your children.

--Japanese Proverb

recent years, we've seen communities take a variety of publicly funded
paths toward their goal of increasing private business and job
opportunities. Among the common strategies: building new sports
stadiums and offering outrageous incentives and tax breaks to lure
companies to relocate. But are these approaches effective?

very, according to Rob Grunewald and Art Rolnick, economists at the
Minneapolis Federal Reserve Bank. Instead, they say, communities should
be investing in early childhood education. In their proposal on the
Minneapolis Federal Reserve Web site (,
Grunewald and Rolnick say it's time we recognize that investments in
early childhood education -- with returns of up to 16 percent -- are
drivers of economic development. Compare that to the 7 percent
long-term return on U.S. stocks.

It's not news that childhood directly influences adult life. Generally
the happier and more stable the childhood, the happier and more stable
the adult. But what about the impact to society?

That's where the financial value becomes clearer. Children whose early
childhood includes developmental, emotional and social support are far
more likely to become the kind of citizens who create a vibrant and
healthy community. They cost society less and bring more to it.

In Michigan's often-cited Perry School Project, children ages 3 and 4
participated in a program of focused developmental, emotional and
social support, which included parental involvement. Initial results
were dramatic, but by the end of high school participants performed
about the same as children who had not been involved in such a program.

However, by age 27, the differences were pronounced. Children who had
received the critical support during their early years grew up to be:

  • three times more likely to own a home,
  • four times more likely to earn $2,000 per month,
  • half as likely to go on welfare as an adult and
  • half as likely to get arrested.

Not only were the kids themselves more likely to be successful, but
society was benefiting. Property and income taxes were being collected
while social subsidies and victim's compensation costs were not being
spent. Society benefited from a higher tax base and a more productive
workforce. These findings have implications on the Social Security
reform debate.

In addition to the above benefits, studies in Ohio have shown that the
availability of affordable and quality child care can itself have a
positive impact on local business. Similar studies in Illinois and
North Carolina support these findings.

Grunewald put it simply: "Dollars invested in early childhood education
yield extraordinary public results." After all, can a stadium or a tax
break reduce crime, improve wages or stop the cycle of poverty?

Momentum is building nationally to improve both the quality and
availability of affordable childcare. We can each do our part by
championing the value of early childhood education and by supporting
public funding efforts to expand the child care industry in our
communities. The next 100 years may depend on it.

Steve Winter lives in Seattle and is community relations director for Family Services, a nonprofit agency in King County. Visit to learn more.

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