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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 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.

Suggested Citation

  • Diego Daruich, 2018. "The Macroeconomic Consequences of Early Childhood Development Policies," Working Papers 2018-29, Federal Reserve Bank of St. Louis.
  • Handle: RePEc:fip:fedlwp:2018-029
    DOI: 10.20955/wp.2018.029
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Matthias Doepke & Giuseppe Sorrenti & Fabrizio Zilibotti, 2019. "The Economics of Parenting," NBER Working Papers 25533, National Bureau of Economic Research, Inc.
    2. Juan Chaparro & Aaron Sojourner & Matthew Wiswall, 2020. "Early Childhood Care and Cognitive Development," Working Papers 2020-012, Human Capital and Economic Opportunity Working Group.
    3. World Bank, 2019. "World Development Report 2019
      [Rapport sur le développement dans le monde 2019]
      ," World Bank Publications, The World Bank, number 30435, December.
    4. Prada, Maria & Rucci, Graciana & Urzua, Sergio, 2019. "Training, Soft Skills and Productivity: Evidence from a Field Experiment," IZA Discussion Papers 12447, Institute of Labor Economics (IZA).
    5. Emily Moschini, 2019. "Child Care Subsidies with One- and Two-Parent Families," 2019 Meeting Papers 42, Society for Economic Dynamics.
    6. Rucci, Graciana & Urzúa, Sergio & Prada, María Fernanda, 2020. "Training, Soft Skills and Productivity: Evidence from a Field Experiment in Retail," IDB Publications (Working Papers) 9647, Inter-American Development Bank.

    More about this item

    Keywords

    Inequality; intergenerational mobility; early childhood development;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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