Parents' Earnings and the Returns to Universal Pre-Kindergarten

This paper asks whether universal pre-kindergarten (UPK) raises parents’ earnings and how much earnings effects matter for evaluating the economic returns to UPK. Using a randomized lottery design, we estimate the effects of enrolling in an extended-day UPK program in New Haven, Connecticut on parents’ labor market outcomes as well as educational expenditures and children’s academic performance. During children’s prekindergarten years, UPK enrollment increases weekly childcare coverage by 11 hours. Enrollment has limited impacts on children’s academic outcomes between kindergarten and 8th grade, likely due to a combination of effect fadeout and substitution away from other programs of similar educational quality. In contrast, UPK enrollment increases parent earnings by 21.7% during pre-kindergarten, and gains persist for at least six years after pre-kindergarten. Gains are largest for middle-income families. Earnings effects for parents have substantial consequences for cost-benefit analysis: tax revenue generated by parents’ income gains reduces the net government cost of UPK by 90% compared to what we would have found without data on parent earnings. Under the conservative assumption that families value UPK at the cost of provision, each dollar of government expenditure on UPK yields $10.04 in benefits. We show that while the benefits of UPK for children per dollar of government expenditure are lower than the benefits of many child-focused policies, the benefits of UPK for adults are high compared to other active labor market policies, and it is gains for adults that generate the high overall returns.