Universal Pre-K as Economic Stimulus: Evidence from Nine States and Large Cities in the U.S

While Universal Pre-Kindergarten (UPK) is known to increase maternal labor supply, its broader labor market effects remain understudied. We analyze UPK programs implemented across nine states and cities between 1995 and 2019, exploiting staggered adoption for identification. In conservative specifications, UPK increased Pre-K enrollment by about 10 percentage points and raised labor force participation, employment, and hours worked by roughly 1 percent. Employment effects were largest for mothers (who account for about one-fifth of the total effect) but extended to other groups, especially women. Among adults without young children, effects are strongest for groups that, based on time use data, spend significant time caring for young children—consistent with UPK inducing increased employment among informal child care providers. Impacts vary across settings, with the largest effects in areas providing at least five hours of care per day. UPK increased aggregate earnings by about 0.6% overall, with each dollar spent generating roughly four dollars in additional earnings; this rises to 3%, corresponding to thirteen dollars per dollar spent, for expansions providing five or more hours of care. Accounting for state tax revenue alone, state Marginal Values of Public Funds (MVPF) range from 0.65 to 1.31, while the social MVPF, which also accounts for induced federal tax revenue, ranges from 1.77 to 3.53 across all programs and is infinite for full-time programs that generate sufficient state and federal tax revenue to fully pay for themselves. Results suggest that labor market responses beyond the canonical model that focuses on parents alone lead to sizable economic returns to early childhood education investments.