ECONOMIC REPORT OF THE PRESIDENT

the preschool programs in Georgia and Oklahoma, the total gains resulting
from the increase in enrollment would raise the level of GDP by 0.17 to 0.44
percent a year after 60 years, when higher levels of enrollment would be fully
reflected in the labor force. This is equivalent to adding between approximately
$30 and $80 billion a year based on 2015 GDP.19 This estimate does
not include the gains to GDP that would result from earnings gains for
parents and the many non-earnings benefits of quality preschool education,
including expanded economic activity due to reduced crime and possible
spillovers to other workers who did not directly benefit from the program
as children.
Income and Other Near-Cash Transfer Programs
In addition to providing direct investments or in-kind transfers to
disadvantaged children and their families, public policy can also provide
more flexible support to low-income families in the form of income transfers.
Programs like the Earned Income Tax Credit, the Child Tax Credit, and
Temporary Assistance for Needy Families are targeted mainly at families
with children, and can benefit children by helping their families to invest
more resources in their early development. Similarly, housing programs
also provide flexible and multi-faceted support to low-income families and
can produce especially large benefits for poor families with young children.
Programs like the Housing Choice Voucher program not only free up a family’s
income so that more of it can be invested in their children, but can also
improve children’s living conditions in ways that can be highly beneficial to
their development.
A large body of literature shows that a boost to income can vastly
improve young children’s health and human capital attainment. An influx
of income in children’s earliest years may provide a particularly large boost
to short-term and long-term health and human capital outcomes (Duncan,
Magnuson, and Vortuba-Drzal 2014). For programs that are not targeted
solely at young children, the academic literature does not always distinguish
between impacts in the first few years of life from impacts throughout childhood
as a whole; where the evidence exists, this chapter presents evidence
showing the impacts of income in children’s earliest years (see Box 4-5 for
discussion of sustaining these impacts in later childhood years).
19 Cascio and Schanzenbach (2013) estimate that these programs increase earnings by 1.3
to 3.5 percent per year. After 60 years, the labor force would fully reflect the higher levels of
enrollment; hence 12.7 percent of each cohort’s earnings would increase by 1.3 to 3.5 percent
per year, yielding an increase in aggregate earnings of 0.17 percent to 0.44 percent. Using 2015
GDP as of February 1, 2016 ($17.94 trillion), this yields an increase of $29.6 to $79.7 billion per
year.
200 | Chapter 4