Universal Pre-K: Big Gains for Parents
A new NBER paper (Parents' Earnings and the Returns to Universal Pre-Kindergarten by John Eric Humphries, Christopher Neilson, Xiaoyang Ye & Seth D. Zimmerman) on New Haven's universal pre-K program reveals significant economic benefits, driven mainly by parents' earnings gains.
Why it matters: Universal pre-K in New Haven significantly boosts parents' earnings while having limited effects on children's academic outcomes. The program's economic returns outpace many other labor market policies.
Data and insights:
Parent earnings:
Rose 21.7% during pre-K years
Gains persisted for at least six years after pre-K
Effects largest for middle and upper-income families within the applicant pool
Black families saw 14.1% gains, Hispanic 17.4%, and White 38.5%
Childcare impacts:
UPK enrollment increased weekly childcare coverage by 11.3 hours
Reduced out-of-pocket costs by $375 per month
62.3% of UPK enrollees substituted away from other childcare options
Children's outcomes:
There is little evidence of academic gains in grades K-8
Middle-income students saw a slight gain in kindergarten died out in later grades
Economic returns:
Each $1 of government spending yielded $5.51 in after-tax benefits for families
Benefits almost entirely from parents' earnings gains
Child-only MVPF ranged from 0.46 to 1.32, depending on assumptions
Program costs:
Gross cost of $24,000 per child
Net cost of $6,600 after accounting for substitution and increased tax revenue
Between the lines:
UPK is an effective labor market policy that helps parents maintain career continuity.
Parents reported that UPK allowed them to work more (76%) and reduced financial stress (85%).
Credit constraints may explain why private markets don't offer similar high-return options.
Yes, but: Academic benefits for children were limited, likely due to substitution from other quality programs and rapid fadeout of early gains.
Bottomline
Universal pre-K offers high economic returns, mainly by boosting parents' careers. Policymakers should consider these substantial adult benefits alongside more modest impacts on children.