Family Policy from a Public Goods Perspective

1
Family Policy from a Public Goods Perspective
Rob Grunewald Federal Reserve Bank of
Minneapolis
2
Choices for Family Policy Objectives

• Support the family with child-rearing.
• Encourage larger (or smaller) families.
• Promote marriage with child-rearing.
• Facilitate labor force participation of mothers.
• Facilitate at-home role for mothers discourage
  working while children are young.
• Protect children against abuse and neglect.
• Facilitate balancing work and family life.
• Help family cope with crises and transitions.

3
Key Economic Concepts

• Public goods
• Characterized by non-rivalry and
  non-excludability
• Externalities
• Benefits or costs that accrue to people other
  than the producer or consumer

4
Families Public Goods Characteristics and
Positive Externalities

• Child-rearing role
• More engaged citizens democracy works better
• Better prepared workforce
• Less likely to commit crime or require social
  assistance
• Mutual support among family members
• Limits use of public safety nets
• Well-functioning families may be better able to
  help others in need

5
Market Forces

• More married women in the workforce
• Fewer children per family
• Immigration
• Mobility
• Job mix

6
Public Policy Forces

• Explicit policies designed to achieve specific
  objectives for individuals in their family roles
  or the family unit as a whole.
• Implicit actions in other policy domains that
  have consequences for children and their
  families, such as tax policy, education finance
  and reform, labor regulations, consumer
  protection.

7
High/Scope Study of Perry Preschool

• In early 1960s, 123 children from low-income
  families in Ypsilanti, Mich.
• Children randomly selected to attend Perry or
  control group.
• High-quality program with well trained teachers,
  daily classroom sessions and weekly home visits.
• Tracked participants and control group through
  age 40.

8
Perry Educational Effects
Source High/Scope Educational Research Foundation
9
Perry Economic Effects at Age 40
Source High/Scope Educational Research Foundation
10
Perry Arrested 5 or More Times Before Age 40
Source High/Scope Educational Research Foundation
11
Perry PreschoolCosts and Benefits Over 62 Years
12
Perry Preschool Estimated Return on
Investment

• Benefit-Cost Ratio 17 to 1
• Annual Rate of Return 18
• Public Rate of Return 16

13
Benefit-Cost Ratios for Other Longitudinal Studies

• Abecedarian Educational Child Care
• 4 to 1
• Chicago-Child Parent
• 7 to 1
• Elmira Prenatal/Early Infancy Project
• 5 to 1

14
Private and Public BenefitsCase Study Child
Care

• Early childhood education
• Private Child is more likely to succeed in
  school and earn more money in workforce.
• Public Child is a better student, less likely to
  require special education, commit crime, or
  require social welfare. More skilled worker
  higher economic growth and tax revenue.

15
Private and Public BenefitsCase Study Child
Care

• Parents can participate in workforce
• Private Higher family income, businesses have
  larger supply of labor from which to hire,
  high-quality child care availability improves
  productivity.
• Public Boosts economic vitality, raises tax
  revenue, produces more family-friendly place to
  live.

16
Private and Public BenefitsCase Study Child
Care

• Child care is a large industry
• Private Child care operations can organize,
  lobby, take advantage of pooled resources, and
  provide employment opportunities for laborers.
• Public A large employer that spends money in
  local economy. (But several industries can make a
  similar argument.)

17
References

• Davies, P. (December 2003). Wives at Work. The
  Region, 4 (17), 12-15, 76-79. http//www.minneapol
  isfed.org/pubs/region/03-12/davies.cfm
• Grunewald, R., Rolnick, A. J. (December 2003).
  Early childhood development Economic development
  with a high public return. The Region, 4
  Supplement(17), 6-12. http//www.minneapolisfed.or
  g/research/studies/earlychild/abc-part2.pdf
• Kammerman, Sheila B. (1999). Child and Family
  Policies An International Overview. In E.F.
  Zigler, S.L. Kagan, N.W. Hall (Eds.), Children,
  Families Government Preparing for the
  Twenty-first Century. New York Cambridge
  University Press.