Friday, December 14, 2012

Preschool Education: Public or Private? The Answer Is Both

We’ve started on the way to providing universal preschool education, but it’s still going to be a long road. At present, the Malaysian strategy is to incentivise private provision of pre-school education via grants and tax incentives, even though there does exist public funded pre-schools.

From last month’s round of NBER working papers, it appears that there’s a place for public pre-schools as well (abstract):

Does State Preschool Crowd-Out Private Provision? The Impact of Universal Preschool on the Childcare Sector in Oklahoma and Georgia
Daphna Bassok, Maria Fitzpatrick, Susanna Loeb

The success of any governmental subsidy depends on whether it increases or crowds out existing consumption. Yet to date there has been little empirical evidence, particularly in the education sector, on whether government intervention crowds out private provision. Universal preschool policies introduced in Georgia and Oklahoma offer an opportunity to investigate the impact of government provision and government funding on provision of childcare. Using synthetic control group difference-in-difference and interrupted time series estimation frameworks, we examine the effects of universal preschool on childcare providers. In both states there is an increase in the amount of formal childcare. In Georgia, both the private and public sectors grow, while in Oklahoma, the increase occurs in the public sector only. The differences likely stem from the states’ choices of provision versus funding. We find the largest positive effects on provision in the most rural areas, a finding that may help direct policymaking efforts aimed at expanding childcare.

The point here is that both public and private-run pre-schools can co-exist, and the former won’t necessarily push out the latter. Another key point is that the largest impact of public pre-schools is in rural areas, where the private sector will be less likely to venture.

If we’re going to achieve universal pre-school education, thereby equalising investment in education for all our children and ensuring a true level playing field for economic opportunity (and hence reducing income and wealth inequality), public funded and run pre-schools would probably have to be part of the strategy.

Technical Notes

Bassok, Daphna; and Maria Fitzpatrick & Susanna Loeb, "Does State Preschool Crowd-Out Private Provision? The Impact of Universal Preschool on the Childcare Sector in Oklahoma and Georgia", NBER Working Paper No. 18605, December 2012

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