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Economics of Quality Early Care and Development Programs

If properly funded and managed, investment in ECD [early childhood development] yields an extraordinary return, far exceeding the return on most investments, private or public...
--from Early Childhood Development on a Large Scale
by Arthur Rolnick, Senior Vice President and Director of Research, and
Robert Grunewalden, Regional Economic Analyst
Minneapolis Federal Reserve Bank

Growing evidence for the developmental necessity of quality care, combined with concern that public and private money needs to be spent in economically sustainable ways has led child advocates and economists to examine the economic impact of early childhood development investments. Their research and expertise offer policymakers and community leaders the knowledge that is necessary for informed decision-making and investing. The following is a guide to research and reports that focus on the economics of early childhood programs.

  • Business and Early Care and Education : A Review of Engagement Strategies and A Connecticut Case Example (2003)
    by Janice Gruendel, harry Orlick, and Abby Kantor
    This review argues for business involvement in child care and education issues, and discusses the steps businesses have taken to establish onsite child care centers for employees, partially sponsor employees' child care costs, and help local child care programs.

  • Early Care Economic Impact Reports (2005)
    by the National Economic Development and Law Center
    These reports outline the effect of the child care industry on the economies of several states.

  • Early Childhood Development on a Large Scale (2005)
    by Robert Grunewald, Regional Economic Analyst, and Arthur J. Rolnick, Senior Vice President and Director of Research of the Minnesota Federal Reserve Bank
    This summary of a proposal argues that "Investing in the education of children in their earliest years makes sense as an economic development strategy precisely because the returns are large, reliable and reaped by both the individuals involved and the general public."

  • Early Childhood Investment Yields Big Payoff (2005)
    by Robert G. Lynch
    This publication calculates the "impact of a high-quality, large-scale, publicly funded ECD [early childhood development] program--for all poor three- and four-year-old children nationwide--on future federal, state, and local government budgets, the economy, and crime."

  • The Economics of Investing in Universal Preschool Education in California (2005)
    by Lynn A. Karoly and James H. Bigelow
    This RAND Corporation publication analyzes the economic returns from investment in preschool education in California.

  • Many Happy Returns: Three Economic Models that Make the Case for School Readiness (2004)
    by Charles Bruner
    This paper examines the three types of economic returns resulting from investments in child care.

  • The Productivity Argument for Investing in Young Children (2004)
    by James Heckman
    In this report, the Nobel Prize-winning economist maintains that "On productivity grounds alone, it appears to make sound business sense to invest in young children from disadvantaged environments. An accumulating body of evidence suggests that early childhood interventions are much more effective than remedies that attempt to compensate for early neglect later in life."

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