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Long-run effects of early childhood programs on adult earnings

Long-run effects of early childhood programs on adult earnings. Jeanne Brooks-Gunn, Katherine Magnuson, & Jane Waldfogel. OR What can be done without long-term evaluation data?. Parenting. Early Physical Health. Physical Health. Early Academic Skills. Academic Achievement.

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Long-run effects of early childhood programs on adult earnings

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  1. Long-run effects of early childhood programs on adult earnings Jeanne Brooks-Gunn, Katherine Magnuson, & Jane Waldfogel

  2. OR What can be done without long-term evaluation data?

  3. Parenting Early Physical Health Physical Health Early Academic Skills Academic Achievement Lifetime Earnings Early Behavior, Socioemotional Skills, and Mental Health Behavior, Socioemotional Skills, and Mental Health Conceptual Model of How Early Parenting, Physical Health, Academic Skills, and Behavior Influence Adult Lifetime Earnings Early Childhood Adolescence Adulthood

  4. Goal • To estimate effects of improved parenting, achievement, health, & behavior at age 5 or 6 on adult earnings • To do so we need: • Studies that estimate “causal” associations between early childhood measures and lifetime earnings • Nationally representative sample • Replication is important (across studies & measures) • Study design addresses potential omitted variable biases • Estimates of lifetime earnings • Based on CPS age-earnings profile for worker with some college

  5. Low Birth Weight Lifetime Earnings Early Academic Skills Physical Health Academic Achievement Attention Behavior, Socioemotional Skills, and Mental Health Home Environment Model for Analysis of How Improvements in Low Birth Weight, Early Academic Skills, Attention, and Home Environments Affect Lifetime Earnings Early Childhood Adolescence Adulthood EarlyChildhood Adolescence Adulthood Figure 2: Model for Analysis of How Improvements in Low Birth Weight, Early Academic Skills, Attention, and Home Environments Affect Lifetime Earnings

  6. Health: Effects of Low Birthweight Low Birth Weight 10%- 15% Lifetime Earnings • Sibling fixed effects estimates suggest that preventing low birth weight increases lifetime earnings by 10-15% • Estimated benefits at birth $60,261-$90,392 • For estimates of program benefits, need to know how effective program is at reducing LBW • WIC possibly reduces LBW by 1/3, so program effects are $17,476-$26,213

  7. Achievement: Academic Skills .16 .22 10% 20% Academic Achievement Lifetime Earnings Early Academic Skills • Use a two-step process: link early skills to skills in adolescence, and link skills in adolescence to lifetime earnings • Value of 1 SD increase in only reading or math at age 5= $13,294-$26,587 • Value of1 SD increase reading and math at age 5= $26,587-$53,175 • If association between early skills and later skills is stronger ~.8 (more effects of program are maintained perhaps because of prolonged intervention) then value of 1 SD increase at age 5= $53,175-$106,350

  8. Achievement: Academic Skills Cont. • Translate into program benefits based on program effectiveness • .40 standard deviation in reading and math from preschool suggest economic benefits for program of $10,634 to $21,270

  9. Behavior: Attention .05 .11 10% 20% Academic Achievement Lifetime Earnings Attention • Use a two-step process: link early attention to adolescent academic skills, and link skills in adolescence to lifetime earnings • Value of 1 SD increase in attention at age 5= $3,323-$14,623 • Translate into program benefits based on program effectiveness • .6 -.8 increase in attention leads to benefits of $1,994-$11,698 at age 5

  10. Parenting: Home Environment .12 .26 10% 20% Academic Achievement Lifetime Earnings HOME Environment • Use a two-step process: link early HOME scale to adolescent academic skills, and link skills in adolescence to lifetime earnings • Value of 1 SD increase in HOME at age 5= $7,976-$33,899 • Translate into program benefits based on program effectiveness • .10 increase in HOME leads to benefits of $798 -$3,390 at age 5

  11. Conclusions • In the absence of longitudinal program evaluations… • Use existing study findings from literature to estimate possible benefits from early childhood programs • Findings from contemporary & nationally representative datasets, rigorous and replicated studies • Flexible approach with transparent assumptions which can be adapted to other domains (provided studies are available)

  12. Key Limitations • For all but LBW estimates only a proportion of benefits (those which accrue through adolescent achievement) and ignores synergies • Estimates are only as good as underlying studies • Worry about both measurement and causal modeling • Lifetime earnings based on average worker, overlooks possibly important heterogeneity

  13. Possible Next Steps • Compared these estimates to … • existing longitudinal program evaluations • Consider whether new analyses will confirm validity of two-step process • Can NCDS or NLSY be used to directly estimate effects of early skills, attention and behavior on later earnings

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