The Macroeconomic Consequences of Early Childhood Development Policies

82 Pages Posted: 12 Oct 2018 Last revised: 21 Feb 2019

See all articles by Diego Daruich

Diego Daruich

New York University (NYU) - Department of Economics

Date Written: 2018-10-11

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

JEL Classification: J13, J24, J62

Suggested Citation

Daruich, Diego, The Macroeconomic Consequences of Early Childhood Development Policies (2018-10-11). FRB St. Louis Working Paper No. 2018-29, Available at SSRN: https://ssrn.com/abstract=3265081 or http://dx.doi.org/10.20955/wp.2018.029

Diego Daruich (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

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