The Effects of Early Education on Intergenerational Mobility in the United States

By Abril Rodriguez Diaz

Intergenerational economic mobility in the United States, measured by the association between parents’ income and their children’s income, has been on decline since the 1980s. As described in a report by the Federal Reserve Bank of Chicago, this is largely due to rising income inequality, as well as related factors such as stagnating wages, increased consumption inequality, and the growing income share of the top 1%. The decrease in intergenerational mobility across the past half century has led to many assertions about a disappearing American dream.

Not only is it becoming less likely for Americans to out-earn their parents, but measures of relative generational mobility are also growing stronger. Relative generational mobility measures the strength of association between parents’ outcomes and children’s outcomes.

While rising economic inequality is the main factor across the board in declines in intergenerational mobility, mobility varies considerably by factors such as race, ethnicity, and geographical location. This is due to community differences in economic diversity as well as education and employment opportunities throughout the U.S. Policies that address decreasing intergenerational mobility delve into various topics, including housing, financial assistance programs, healthcare, and education.

Policies focused on early education are particularly striking, primarily because research suggests that such policies have long-term effects and do not “fade-out,” but rather continue to produce benefits throughout secondary education and careers. I thus examine potential remedies for intergenerational mobility centered around early education.

Increasing Participation in Pre-Kindergarten Programs

On its own, quality early education is integral in helping children from low-income families break the cycle of poverty. Several early education studies have concluded that preschool and pre-kindergarten programs, which are usually private, put children who enroll in them at a significant advantage from children who do not. Policy analysts have therefore cited “universal pre-K” as an effective and necessary measure to even the playing field, break poverty cycles, and improve intergenerational mobility long-term. Specifically, studies have shown that later in life, children who attend preschool—even those from less privileged backgrounds—are likely to perform better in school, less likely to get in trouble, and are even more likely to graduate high school and attend college.

Nobel Prize-winning economist James Heckman analyzed over thirty-five years of data from the Perry Preschool Project, a 1970s study that provided two years of preschool to underprivileged children. Heckman and his colleagues concluded with an astounding estimate: “every dollar the Perry Preschool project invested in kids had a return on investment of 7-10% per year, through increased economic gains for the kids and decreased public spending on them through other social programs when they got older.” Participants in the program were significantly less likely to later be unemployed, go on social programs, and get arrested. These findings demonstrate how public preschool could yield economic benefits for the government as well.

Despite the benefits of universal pre-K, critics argue that it is not an end-all-be-all solution. Concerns about the effectiveness of universal pre-K policies are brought to light when we consider the target population: poor families. In the enactment of free preschool, what percentage of low-income families would choose not to enroll their children? Furthermore, one technical difficulty could be that working class families would face the challenge of transporting their children to and from preschool.

As for elementary school, the issues are far more complex; while every American child has access to a public education, the drastic differences in education quality by district, or even school-to-school, are difficult to address. Potential remedies that would address disparities in education quality include working to increase teaching quality at underfunded schools, as well as increasing the social mix of students within public schools.

Increasing Teaching Quality

While supervising teaching quality at underfunded public schools is difficult, teaching performance can be measured by observing the standardized test results of students. Through measures such as standardized testing, school districts could enact performance-based compensation with the aim of encouraging teachers to better prepare their students.

The implementation of standardized testing is, in itself, an unsolved problem, as states each have different types of standardized tests, and prioritize standardized testing at different levels. While appealing at first, arguments against performance-based compensation at early education levels state that standardized testing is not an effective measure of teacher performance, and more so, could lead to teachers neglecting other important aspects of their roles, such as working to improve students’ self-efficacy. Critics of standardized testing argue that “teaching to the test” is detrimental to students’ learning and that it leads teachers to neglect non-testing areas.

A similar, perhaps less divisive, suggestion for improving teacher quality includes increasing baseline teacher salaries overall. According to the National Education Association, teachers make almost 4% less than they did ten years ago when salaries are adjusted for inflation. Today, fewer college-educated individuals are pursuing careers in education; in fact, from 2010 to 2018, enrollment in teacher preparation programs nationwide declined by over a third.

According to a report from the Economic Policy Institute, raising teachers’ wages is essential to improving teacher quality overall. Making teaching salaries more competitive is the first step in increasing interest and improving retention rates in educational careers. The Equity Project Charter School (or TEP) demonstrates just how increasing teacher salaries can dramatically benefit student performance. TEP’s $125,000 base salary, with up to $25,000 in bonuses, resulted in TEP performing in the top 2% of approximately four hundred New York City middle schools.

The improvements in student performance associated with higher baseline teacher salaries signifies potential effects on early education policy, and therefore, on measures of intergenerational mobility in the U.S.

Diversifying Public School Demographics

Increasing the social mix of students within public schools has been demonstrated as effective method of helping children from low-income backgrounds perform at higher levels. Not only do low-income children learn better alongside more privileged children, but they are also more likely to benefit from a superior social environment, better teachers, less exposure to drugs and violence, and more.

However, in the United States, public schools are often assigned based on the location of a child’s home, with most children being assigned to whichever school is closest to their neighborhood. Therefore, the issue extends beyond assigning children to particular schools and towards urban planning surrounding public elementary schools. In his paper “The Effects Of Exposure To Better Neighborhoods On Children: New Evidence From The Moving To Opportunity Experiment,” public economist Raj Chetty discusses the implications of designing family-oriented neighborhoods and communities to be more economically diverse, as this could have beneficial impacts on underprivileged children. For instance, putting apartments on one side of an elementary school and a more affluent neighborhood on the other would ensure that children from the apartment families would be able to attend a school with peers from more affluent backgrounds. Chetty and his colleagues found that children who live and attend school in lower-poverty, economically diverse areas are more likely to attend college, to have higher incomes as adults, and are also less likely to be single parents later in life.

What’s Next?

Figure 1: Heckman Curve


The Heckman Curve, which shows that “the highest rate of economic returns comes from the earliest investments in children,” demonstrates why it is so important to invest in early education. To facilitate intergenerational mobility and ensure that low-income children get started on the right path to breaking the cycle of poverty, increasing participation in pre-kindergarten programs, improving teacher quality, and diversifying public school demographics would all be solid first steps contributing to increased intergenerational mobility.

The effects of increased teacher salaries on student achievement would be difficult to measure. Thus, this is not the optimal first step towards increasing intergenerational mobility. Diversifying public schools has shown to benefit low-income children significantly, but changing the way in which students are assigned to public schools is not straightforward. While poorer families might be willing to commute to further, higher quality schools, affluent families would not want to send their children to lower-quality schools that are further from home. Therefore, diversifying public schools requires significant work in urban planning and would need to be tailored to each neighborhood.

In recent years, members of Congress have begun to bring forth “universal pre-K” proposals, and some states such as California are on the cusp of introducing it. Making preschool available to all, just like public elementary, middle, and high school, is the first step to breaking poverty cycles and increasing intergenerational mobility.