Economic benefits of early childhood development investments

Young girl sits by her desk in primary school in Akosombo, Ghana, W. Africa.
Young girl sits by her desk in primary school in Akosombo, Ghana, W. Africa. © Jacek Sopotnicki | Dreamstime Images

Introduction

Advances in neuroscience and economic studies convincingly demonstrate that early childhood experiences can have a profound impact on brain development and on the child’s subsequent learning and health as well as their financial earnings as an adult. Children who are poorly nourished and nurtured, or those who do not receive early stimulation, are likely to learn less in school and earn less as adults. For example, the 20-year study, “Labor market returns to an early childhood stimulation intervention in Jamaica” (Gertler et al, 2014) showed that disadvantaged young children who were exposed to high-quality early stimulation interventions as infants and toddlers earned up to 25 percent higher wages 20 years later as adults. Indeed, their earnings as adults were equivalent to adults who grew up in much wealthier households.

The Heckman Equation

Early childhood development is a smart investment. The earlier the investment, the greater the return.“   James Heckman

Video (Eng) | James Heckman: The Economics of Inequality and Childhood Education (14:49)

Similar to the findings of the Jamaican study, a number of cost-benefit analyses have been conducted that clearly indicate that early childhood programs can have a sizable impact on economic growth. Current evidence suggests that each additional dollar invested in quality early childhood programs yields a return of between $6 dollars and $17 dollars. This evidence is well summarized by James Heckman, a Nobel Laurate in Economics, in a number of scientific articles that are available on his website.

The Heckman Curve

Illustration of the Heckman Equation

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