Early childhood interventions to reduce intergenerational inequality

There are a variety of constraints that parents face which lead to suboptimal investments in their children. In this chapter, we focus on three key constraints linked to scarcity of financial resources, productive inputs, and information. While cash transfers can help relax financial constraints, their effects on child development are limited by parental beliefs. Hence, governments have opted to provide direct ‘high-quality’ inputs through centre-based care. While studies show that there are sizeable life-cycle benefits for individuals exposed to these interventions, ensuring the quality of these interventions is expensive, especially as parents find it hard to infer process quality. Alternatively, home-visiting programmes providing information to parents on early childhood development also show promising long-lasting effects. But a limitation to delivering these at scale is the cost associated with using high-skilled staff. With the recent digital revolution, interventions employing low-cost behavioural nudges have shown positive effects, holding promise for the future.