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The Macroeconomic Consequences of Early Childhood Development Policies

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  • Diego Daruich

Abstract

To study long-run large-scale early childhood policies, this paper incorporates early childhood investments into a general equilibrium heterogeneous agent overlapping generations model calibrated using US data. A randomized controlled trial 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 over twice as large welfare gains as those of a short-run small-scale program even after considering general equilibrium and taxation effects. Key to this difference is that investing in a child not only improves her skills but also creates better ancestors for future generations.

Suggested Citation

  • Diego Daruich, 2026. "The Macroeconomic Consequences of Early Childhood Development Policies," Journal of Political Economy, University of Chicago Press, vol. 134(7), pages 2023-2073.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/740224
    DOI: 10.1086/740224
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