The Economic Rationale for Investing in Children: A Focus on Child Care. Introduction


A guiding principle behind President George W. Bush's education policy is that "no child should be left behind," and Congress is currently formulating legislation to assist and place additional pressure on failing schools to raise their level of performance. This commitment is well placed because of the dramatic increase in the economic penalty for poor quality schooling. Murphy and Welch (1992), Levy and Murnane (1992) and many others document the substantial increase in the return to both years of schooling and school quality during the latter part of the 20th century.

Yet despite numerous education reforms and the expenditure of substantial resources, the view that the public schools can be prodded and helped to succeed in providing at least a basic education for all children seems rather farfetched. In a recent New York Times Magazine article, Traub (2000) raises doubts about the ability of schools to lift disadvantaged children out of poverty. He argues that even the most ambitious school reforms are unlikely to produce dramatic improvements in student performance "in the face of the kind of disadvantages that so many ghetto children bring with them to the schoolhouse door, and return to at home." To Traub, the popularity of school reform as a solution to the problem of poverty emanates in part because "school reform involves relatively little money, asks practically nothing of the nonpoor and is accompanied by the enabling sensation that comes from expressing faith in the capacity of the poor to overcome disadvantage by themselves."

Though Traub refers to myriad disadvantages, perhaps the most important concern is the readiness of children to learn upon entering public school at age five or six. Importantly, the government role in early childhood care and education is far less intensive than in elementary and secondary education. Perhaps the most active involvement is through State Departments of Children and Family Services, where these often understaffed and overburdened agencies attempt to identify and rectify the most egregious cases of child abuse and neglect.

This raises the important question of why those arguments that justify government regulation, finance, and provision of elementary and secondary education have not been applied to the preschool years. Importantly, not all forces for change push greater government involvement. To the contrary, the rise in home schooling, expansion of charter schools and growth of voucher programs all demonstrate movements toward less government intervention along a number of dimensions.

In this paper consideration is given to the experience of government involvement in elementary and secondary education in order to provide another perspective from which to examine government early education policies. Section II describes the standard issues that enter the debate over the appropriate government role in education. Section III reviews the evidence on the determination of school quality and the productivity of investments in elementary and secondary education. This section emphasizes the determinants of teacher quality and the returns to smaller classes and other expenditures, focusing on economically disadvantaged students. The final section offers a number of policy recommendations for early education based on the experiences from elementary and secondary schooling. Reaching a consensus that the private sector fails to provide the optimal quantity of education along a number of dimensions does not imply that government intervention will be beneficial. Any regulations or investments must be made with great care and a commitment to evaluation and learning from experience.