Free Pre-K Gives Parents’ Income a Long-Lasting Boost‌‌

Unlike parents in many other high-income countries, American parents are largely on their own until their kids are old enough for kindergarten when it comes to childcare and schooling. But over the past two decades or so, municipalities around the country have started rolling out public pre-kindergarten that is available to all children, usually at age three or four, regardless of income level—what has become known as universal pre-kindergarten (UPK). ‌

Typically, advocates make the case for UPK with two arguments: it’s good for kids, and it’s good for parents. Yale SOM’s Seth Zimmerman, an economist who studies education and public policy, says that the benefits of UPK to children are fairly well established: studies of UPK programs have found positive effects on kids’ test scores during UPK. These benefits tend to fade during middle school, but reemerge later on in kids’ academic careers, around when they reach high school. ‌

It makes sense that the programs would also have meaningful benefits for parents, Zimmerman says. Childcare in America is expensive, and programs like UPK can ease the financial burden. But there is little compelling evidence demonstrating how, exactly, such programs affect parents. Evaluating how UPK benefits parents, such as by allowing them to work longer hours or saving them money that would otherwise be spent on privately procured childcare, “might really change the way we view UPK as a policy,” he says.‌

In a new study, Zimmerman, John Eric Humphries and Christopher Neilson of Yale, and Xiaoyang Ye of Brown University investigate this question, and find that once benefits to parents are included, UPK offers a massive bang for the buck. In the New Haven Public Schools (NHPS), according to the study, every dollar spent on UPK yields $10.04 in benefits to parents. Taking parental earnings into account in a cost-benefit analysis, Zimmerman says, “reduces the cost of the program by 90%”—a meaningful finding when considering how to allocate limited government resources. ‌

The relationship between universal pre-K programs and parents’ work and earnings patterns has been understudied until now because of the challenge of linking data on UPK enrollment with labor market data. But Zimmerman and Neilson had longstanding relationships with NHPS; they worked with the school system, Connecticut’s labor department, and Yale to link this data together so they could analyze it. This process took roughly four years, but it eventually yielded a dataset of 16,485 matched applications in a data set that spanned nearly 20 years. ‌

The UPK program run by NHPS offers six and a half hours per day of free full-time care for three- and four-year-olds. Most programs also offer additional hours, for no or little charge, that extend the school day from 7:30 a.m. to 5:30 p.m. That free childcare is enormously oversubscribed: between 2003 and 2020, there were only 1.5 to 4 slots available for every 10 applicants to pre-kindergarten for three-year-olds (PK3), and even fewer slots in the program for four-year-olds (PK4) because many students continue from PK3 to PK4. ‌

To deal with that excess demand fairly, NHPS uses a lottery system to randomly assign spots to some parents and not others. Since the only difference between the lucky parents whose children did get a spot in UPK and those who didn’t was the random lottery assignment, the researchers could follow both parents and students over time, and compare outcomes between parents in both groups without worrying that the parent groups diverged on relevant factors such as education level and whether they lived in a high- or low-income neighborhood. In their sample, about one in four applicants scored a spot and enrolled their child in UPK.‌

The researchers found that landing a spot in UPK gave parents an additional 11.3 hours per week of childcare, which translated into earning nearly 22% more each year. The effect of getting into the program lasted not just for the short period of UPK enrollment, but for at least an additional six years after preschool ended, for a total average benefit of $8,799.87 per year in 2024 dollars. The authors explain this earnings bump as an effect of both being able to work more and a lower likelihood of a career disruption. The effect was consistent across the cohorts of parents whose kids were placed, irrespective of how the overall economy was faring, notes Zimmerman. Their data begins as the U.S. was experiencing the early 2000s recession and continues through the hot post-COVID labor market (some of the COVID period is not in the sample, given that schools were shuttered). “Since we have this really long time horizon, we see the whole spectrum of macroeconomic conditions from really good to really bad; you can think of this effect as an average of what happened to people across the last 20 years,” he says.‌

The UPK program had different effects on parents and children depending on where they fell in the income distribution. When the authors analyzed the impact of preschool by parental income, they found the effect for parents was particularly pronounced for the parents with earnings in the top and middle third of applicants. Because UPK serves a mostly low-income population, those in the highest-earning third of applications have incomes that are near the median of the overall New Haven population—the main beneficiaries are middle-class people. By contrast, he adds, effects for low-income parents are not as dramatic. “While UPK offers more hours than Head Start or other subsidized programs available to low-income parents, parents in these families may not have jobs where there is a path to career advancement from working additional hours.” ‌

For children, families in the middle third reaped the largest benefit from UPK, showing the biggest gain in test scores in kindergarten. Zimmerman says this could be because these middle-class parents don’t have access to means-tested subsidized programs geared toward low-income parents, yet they can’t easily afford the private options used by higher-income parents. “We call this phenomenon the childcare ‘donut hole’—the idea being that there is a gap in access at middle incomes,” he says.‌

The researchers complemented this analysis with a survey of parents that asked them about their alternative childcare options, the effect of UPK on their work patterns, and their earnings and education levels. They found that for the majority of parents, UPK was not an alternative to no childcare at all, but a substitute for other options. Those options ranged from heavily subsidized or free programs like Head Start to private options. That has implications for evaluating UPK’s cost, says Zimmerman. “When you're thinking about what the real cost of this program is to the government, you want to be sure you take that into account, because many of these other things people will be doing, such as Head Start, are also funded by the government.” ‌

While evaluations of other policies targeted at children, such as expanding health insurance for children or spending more on schools, have found returns with larger magnitudes than UPK, there are few policies with such a dramatic impact on parents. Popular and longstanding policies intended to encourage work such as the Earned Income Tax Credit yield benefits that are closer to $1 for every $1 of government spending—a far cry from the $10 of benefits that simply comes from letting parents work more while their kids are young. ‌