The Economic Impact and Profile of Connecticut’s ECE Industry By:

Over the past several years, scholars and public policy researchers have been giving increased attention to early childhood investments, using benefit-cost analyses and assessing the contribution of the early care and education “industry ” to the economic capacity of states and municipalities. Nobel laureate economist James Heckman1 finds a substantial long-term return on investment resulting from the provision of high quality early care and early education (hereafter, ECE) services, based on later averted costs for welfare dependency and prison confinement. Similarly, in December 2003, Minneapolis Federal Reserve senior economists Arthur Rolnick and Rob Grunewald reported that high quality early childhood investment provides an annual long-term return of 16%, significantly greater than many other uses of public (or private) monies.2 Surveys of parents using ECE primarily emphasize the educational benefit for their children; 3 these are the long-term benefits that these formal studies validate. Yet ECE is also an important economic sector, generating jobs, demand for goods and services, and permitting parents either to hold jobs, work longer hours, and even enhance their productivity because of the knowledge that their child is in good hands with their ECE provider. Looking at just these short-run returns, Cornell economist Mildred Warner4 found that the servic