By
Bryan Bezold
RCGA Director of Research and Chief Economist
Education is an important part of economic development. This
is observable in a number of ways, but the usual association
between education and economic development is at the top of
the educational ladder.
Historically, economic developers have been concerned with the
skills of the working age population, and there’s a statistically
significant link between the share of adults in a metropolitan
area and the income growth of that metropolitan area. It’s also
true that the unemployment rate for high school graduates is
higher than the unemployment rate for college graduates.
As economic developers work to attract businesses to a region
or state, those businesses are typically concerned with the
skills of workers in an immediate way. They might be able to
wait six months or a year for skilled workers, but they typically
need them right away.
The other challenge that education policy presents is political.
Elementary and secondary educational systems can be fiercely
political venues. Business and civic leaders can see many risks
to becoming involved in such political processes, with few immediate
rewards. This can be especially true in the areas where schools
are weakest and the needs of students most acute as in inner
cities.
Thus there are good reasons for economic developers and business
leaders to look at post-secondary education, from job training
programs at community colleges to four-year colleges and graduate
schools. They need skilled and adaptable workers now, and there
are few benefits to involvement in the highly politicized arenas
that school systems sometimes become.
Recent evidence, however, suggests that the greater economic
payoff, for both individuals and the broader economy, to education
is at an earlier level than post-secondary or even elementary
education. Economists, psychologists, and educators are increasingly
concluding that early childhood education—programs that start
before kindergarten and can last as late as the third grade—has
a bigger economic payoff than investment in education at any
other age.
There are several reasons why the economic benefit of early
childhood programs is so great. Initially, it acts to help stimulate
learning at a time when children’s brains are still developing.
Education at this early age lays a foundation for students to
build on for years to come.
Children who participate in early childhood programs are less
likely to be disruptive students, so their elementary school
classmates also benefit from their involvement. The parents
of the students benefit, because they are less likely to have
to leave work to deal with a child’s behavioral or educational
problems. That means that the parents are more productive workers,
so their employers benefit as well.
Graduates of early childhood programs are less likely to commit
crimes as they get older, which means lower rates of crime and
incarceration, which saves state and local taxpayers’ money.1
And last, but not least, children who perform better academically,
will eventually become more productive workers. The benefits
of more productive workers are both internal, in the form of
higher wages for the individual, and economy wide, as a more
productive workforce leads to faster economic growth.
Since the benefits accrue beyond the individual student, early
childhood educational programs produce what economists call
positive externalities. Programs that produce positive externalities
are excellent candidates for public investment. In the case
of early childhood education, the returns on investment are
significant. Long-term studies of children that enrolled in
pre-k educational programs estimate that the payoff of such
programs is as high as $17 for every $1 invested.2
The effectiveness of early childhood education has caused a
number of prominent individuals and groups to support the concept.
The Business Roundtable, an organization of CEOs, concluded
that after decades of corporate involvement in education, “What
we have learned leads us to conclude that America’s continuing
efforts to improve education will be hampered without a federal
and state commitment to early childhood education for three-
and four-year old children.”3 Nobel Prize winning
economist James Heckmann describes these programs with the statement,
“It is a rare public policy initiative that promotes fairness
and justice and at the same time promotes productivity in the
economy and in society at large. Investing in disadvantaged
young children is such a policy.”4
For a more extensive economic update, please visit the
St. Louis Regional Chamber & Growth Association (RCGA) website.
http://www.gotostlouis.org/x414.xml
1 Reynolds, Arthur J., Judy A. Temple, Su-Ruu
Ou, Dylan L. Robertson, Joshua P. Mersky, James W. Topitzes,
and Michael Niles (2006). “Effects of school-based, early childhood
intervention on adult health and well being: A 20-year follow
up of low income families.” Early Childhood Research Collaborative.
www.earlychildhoodrc.org.
2 Burr, James and Rob Grunewald (2006). “Lessons learned: A
review of early childhood development studies.” Federal Reserve
Bank of Minneapolis. http://woodrow.mpls.frb.fed.us/research/studies/earlychild/lessonslearned.pdf.
3 “Early childhood education: A call to action from the business
community.” http://www.businessroundtable.org/pdf/901.pdf.
4 Heckmann, James J. (2006). “Investing in disadvantaged young
children is an economically efficient policy.” http://www.ced.org/docs/report/report_2006prek_heckman.pdf.
