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The Macroeconomic Consequences of Early Childhood Development Policies

Diego Daruich ()

No 2018-29, Working Papers from Federal Reserve Bank of St. Louis

Abstract: To study long-run large-scale early childhood policies, this paper incorporates early childhood investments into a standard general-equilibrium (GE) heterogeneous-agent overlapping-generations model. After estimating it using US data, we show that an RCT evaluation of a short-run small-scale early childhood program in the model predicts effects on children's education and income that are similar to the empirical evidence. A long-run large-scale program, however, yields twice as large welfare gains, even after considering GE and taxation effects. Key to this difference is that investing in a child not only improves her skills but also creates a better parent for the next generation.

Keywords: Inequality; intergenerational mobility; early childhood development (search for similar items in EconPapers)
JEL-codes: J13 J24 J62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2018-10-11
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DOI: 10.20955/wp.2018.029

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