This chapter seeks to set out what economists have learned about the effects of early childhood influences on later life outcomes, and about ameliorating the effects of negative influences. We begin with a brief overview of the theory which illustrates that evidence of a causal relationship between a shock in early childhood and a future outcome says little about whether the relationship in question is biological or immutable. We then survey recent work which shows that events before five years old can have large long term impacts on adult outcomes. Child and family characteristics measured at school entry do as much to explain future outcomes as factors that labor economists have more traditionally focused on, such as years of education. Yet while children can be permanently damaged at this age, an important message is that the damage can often be remediated. We provide a brief overview of evidence regarding the effectiveness of different types of policies to provide remediation. We conclude with a list of some of the many outstanding questions for future research.
Although there is widespread agreement that compensatory preschool education can produce short-term gains in test scores, its ability to produce meaningful long-term improvements in educational and economic success has been questioned. This paper reviews the evidence regarding long-term effects, including a classical experiment and benefit-cost analysis. It is concluded that compensatory preschool can produce long-term gains in school success through contributions to cognitive abilities not adequately measured by Intelligence (IQ) tests. Greater educational success is accompanied by substantial improvements in social and economic outcomes including employment, teen pregnancy, and welfare assistance.
The majority of children in the U.S. and many other high-income nations are now cared for many hours per week by people who are neither their parents nor their school teachers. The role of such preschool and out of school care is potentially two-fold: First, child care makes it feasible for parents to be employed. Second, early intervention programs and after school programs aim to enhance child development, particularly among disadvantaged children. Corresponding to this distinction, the literature has two branches. The first focuses on the market for child care and analyzes factors affecting the supply, demand, and quality of care. The second focuses on child outcomes and asks whether certain types of programs can ameliorate the effects of early disadvantage. The primary goal of this review is to bring the two literatures together in order to suggest ways that both may be enhanced. Accordingly, we provide an overview of the number of children being cared for in different sorts of arrangements; describe theory and evidence about the nature of the private child care market; and discuss theory and evidence about government intervention in the market for child care. Our summary suggests that additional research is necessary to highlight the ways that government programs and market provided child care interact with each other.
This paper considers alternative policies for promoting skill formation that are targetted to different stages of the life cycle. We demonstrate the importance of both cognitive and noncognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success. Most of the gaps in college attendance and delay are determined by early family factors. Children from better families and with high ability earn higher returns to schooling. We find only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps. At most 8% of American youth are credit constrained in the traditional usage of that term. The evidence points to a high return to early interventions and a low return to remedial or compensatory interventions later in the life cycle. Skill and ability beget future skill and ability. At current levels of funding, traditional policies like tuition subsidies, improvements in school quality, job training and tax rebates are unlikely to be effective in closing gaps.
This paper discusses early childhood education programs: their goals; effectiveness; optimal timing, targeting, and content; and costs and benefits. Early intervention has significant short- and medium-term benefits: most notably it reduces grade repetition and special education costs, and provides quality child care. The effects are greatest for more disadvantaged children. Some model programs have produced exciting improvements in educational attainment and earnings and have reduced welfare dependency and crime. The jury is still out on the long-term effects of Head Start, but Head Start would pay for itself if it produced a quarter of the long-term gains of model programs.
This paper considers the sources of skill formation in a modern economy and emphasizes the importance of both cognitive and noncognitive skills in producing economic and social success and the importance of both formal academic institutions and families and firms as sources of learning. Skill formation is a dynamic process with strong synergistic components. Skill begets skill. Early investment promotes later investment. Noncognitive skills and motivation are important determinants of success and these can be improved more successfully and at later ages than basic cognitive skills. Methods currently used to evaluate educational interventions ignore these noncogntive skills and therefore substantially understate the benefits of early intervention programs and mentoring and teenage motivation programs. At current levels of investment, American society underinvests in the very young and overinvests in mature adults with low skills.
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