Universal Pre-Kindergarten in Connecticut
Introduction
Humphries et al. (2025) study the effects of universal pre-kindergarten (UPK) on parental earnings and child test score outcomes. In the late 1990s, New Haven, Connecticut introduced non-means-tested public preschool and implemented a lottery system to randomly allocate the limited number of spots.
The paper utilizes data on this random assignment linked to Unemployment Insurance data to estimate the effect of receiving a UPK offer on parental earnings. The paper finds that parents of children who receive a UPK spot through the admissions lottery have earnings gains during the years in which their children are pre-kindergarten ages, as well as up to six years after.
In addition, the paper finds positive (though not statistically significant) effects of UPK on children’s kindergarten test scores.
Humphries et al. (2025) estimate the MVPF of UPK considering a range of assumptions about whether or how much parents value earnings gains relative to the disutility of labor.
MVPF = 4.6
Net Cost
The paper estimates net cost as the sum of the direct cost per pupil to provide UPK, savings due to substitution away from other publicly funded pre-kindergarten programs, tax revenue due to parents’ earnings gains, and tax revenue due to children’s earnings gains.
The direct cost is estimated as the yearly per pupil expenditure of $15,500 multiplied by the average enrollment length of 1.56 years: \$15,500 \times 1.56 = \$24,180 .
Savings from substitution away from other publicly funded pre-kindergarten programs are the per-pupil expenditure on other programs, multiplied by the estimate of reduction in years of enrollment for other programs. This totals $8,800 in savings. The inclusion of this component relies on the assumption that other programs are not over-subscribed, such that when one student substitutes away the government is not paying those costs for another student who has filled the spot.
The paper estimates tax revenue changes using the estimated effect of UPK on parents’ wage income. The paper assumes earnings gains accrue during and up to six years after pre-kindergarten enrollment and an average tax rate of 20%. As the wage effects are estimated per individual adult, the estimate is scaled by the average number of parents per enrolled child, which is 1.56. This yields an estimate of $13,400 additional dollars in tax revenue from parents’ wage increases per enrolled student in pre-kindergarten.
Finally, the paper includes an estimate of tax revenue changes due to projected earnings gains for the children enrolled in UPK. Following, Chetty et al. (2011), the paper estimates the net present value of lifetime earnings for the average four-year-old to be $353,351. From Cascio (2023) the paper estimates that a one standard deviation increase in kindergarten test scores would lead to a 10 percent increase in lifetime earnings. Lastly, the paper incorporates their estimate of the causal effect of universal pre-kindergarten on kindergarten test scores, which is .06 standard deviations. Using the same tax rate of 20% leads to an estimate of 0.20 \times 0.06 \times 0.10 \times \$353,351 = \$424 in increased government revenue.
Summing all components of government cost produces a net cost estimate of \$24,180 – \$8,800 – \$13,400 – \$424 = \$1,556, which the paper approximates as $1,500.
Willingness to Pay
The paper measures willingness-to-pay as the reduction in parents’ out of pocket spending on pre-kindergarten as well as the projected earnings gains from children’s increased test scores. In this estimate, parental earnings gains are not included in the willingness-to-pay under the assumption that with or without a UPK policy, parents are able to choose the optimal amount of labor given the price of childcare and the disutility of labor.
Using an instrumental variables estimation approach and survey data, the paper finds that UPK enrollment leads to $375 lower monthly out-of-pocket costs. Assuming this applies to a 9-month school year over the 1.56 years that students are enrolled in UPK on average, and discounting after one year leads to
(375 \times 9)/(1.03) + (375 \times 9 \times 0.56)/(1.03)^{0.56} = \$5,136 in total cost reductions.
In addition, the paper incorporates after-tax earnings gains from projecting children’s kindergarten test score increases. Following the same calculation as above, leads to an estimate of 0.80 \times 0.06 \times 0.10 \times \$353,351 = \$1,696 in after-tax earnings gains.
This leads to a total willingness-to-pay of \$5,136+\$1,696 = \$6,832.
MVPF Summary
With a willingness-to-pay of $6,832 and a net government cost of $1,500, the estimated MVPF of UPK in New Haven is 4.55.
In addition, the paper presents a range of robustness MVPF calculations that vary the underlying assumptions. For instance, if one assumes that parents do not internalize the earnings gains from after their child leaves pre-kindergarten due to reduced career disruptions, then including these earnings gains in the willingness-to-pay raises the MVPF to 32.88.
References
Cascio, Elizabeth U. (2023). “Does Universal Preschool Hit the Target?: Program Access and Preschool Impacts.” Journal of Human Resources, 58(1), 1–42. DOI: https://doi.org/10.3368/jhr.58.3.0220-10728R1
Chetty, Raj, John N. Friedman, Nathaniel Hilger, Emmanuel Saez, Diane Whitmore Schanzenbach, and Danny Yagan (2011). “How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star.” The Quarterly Journal of Economics, 126(4): 1593–1660. DOI: https://doi.org/10.1093/qje/qjr041
Humphries, John Eric, Christopher Neilson, Xiaoyang Ye, and Seth D. Zimmerman (2025). “Parents’ Earnings and the Returns to Universal Pre-Kindergarten.” NBER Working Paper 33038. http://www.nber.org/papers/w33038.
Policy Features
- Category
- Education
- Sub-Category
- Child Education
- Beneficiary Type(s)
- Children and Youth, Children under five, Mothers and pregnant women, Parents
- Average Age
- 3.5 (kids)
- Average Income
- 25157
- Country of Implementation
- United States
- Year of Implementation
- 1990s
- Empirical Method
- Lottery
- Research Type
- Primary
- Peer Reviewed
- No
- MVPF Publication Link
- www.nber.org/papers/w33038