Closing the Opportunity Gap for Young Children (2023) / Chapter Skim
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6 The Economic Costs of the Opportunity Gap
6 The Economic Costs of the Opportunity Gap
Pages 309-322
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From page 309... ...
Second, data are not always available with which to document differences in outcomes in order to consider the results of either RCT interventions or quasi-experimental designs, so the upper bound described above would be underestimated if the largest effects were for difficult-to-measure 1This chapter is adapted from a paper commissioned by the committee for this study (Bitler & Oh, 2022)
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From page 310... ...
, provide representative calculations from the literature for three interventions, and present the conclusions that can be drawn from these findings. THE OPPORTUNITY GAP: COST ESTIMATES This section provides rough estimates of the economic costs of the opportunity gap that are due to mortality and morbidity as a percentage of gross domestic product (GDP)
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From page 311... ...
of 13.31/1,000 live births. By comparison, the rate for babies born to American Indian or Alaska Native mothers was 9.22/1,000 live births; for those born to Puerto Rican mothers was 7.71/1,000 live births; for those born to non-Hispanic White mothers was 5.63/1,000 live births; and for those born to Mexican, Cuban, Asian or Pacific Islander, or Central and South American mothers was even lower (MacDorman & Matthews, 2011)
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From page 312... ...
If averting low birthweight, low gestational age, and other health differences at birth affects later adult earnings, one should count either the properly measured present discounted value of the lower birthweight or lower gestational age and other health differences or the positive carry-on effects of these improved outcomes, but not both. SHARE OF OPPORTUNITY GAPS AND THEIR COSTS THAT CAN BE AFFECTED BY POLICY The previous section presented some examples of calculations of the net savings to society from closing opportunity gaps, detailed some of the mortality differences across groups that would be eliminated, and described challenges with making even rough estimates for valuing benefits of these changes.
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From page 313... ...
But any program that will eliminate disparities must either leave advantaged children unaffected or have greater impacts on the disadvantaged groups. APPROACHES TO EVALUATING THE NET BENEFITS OF INVESTMENT IN MITIGATING THE OPPORTUNITY GAP Even though a specific policy intervention might prove to be highly effective in mitigating the opportunity gap, it may not be feasible if it incurs tremendous costs relative to benefits.
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With this method, the lowest-cost way of achieving a common goal is preferred. For instance, two options for reducing infant deaths by 50% can be considered: expanding Medicaid coverage to disadvantaged pregnant women or expanding Medicaid coverage to families with newborn babies.
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For example, if increasing the benefit provided by a cash transfer program makes a recipient work less and thus decreases the labor supply, which in turn reduces tax revenue, then the net cost of the program to the government will be greater than the direct cost of program implementation. By contrast, if individuals work more and thereby increase the labor supply to be eligible for additional benefits from the earned income tax credit, that policy externality will decrease the net cost of that program.3 Intuitively, the larger the MVPF, the greater the net benefits generated by a policy.
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From page 316... ...
A large body of literature on the effects of the SNAP/Food Stamp program provides valuable information about its effects in closing many aspects of the opportunity gap. SNAP currently provides a voucher that can be used to purchase food by low-income families that have gross incomes below 130% of the federal poverty threshold or otherwise satisfy gross income limits and have net incomes below 100% of the federal poverty threshold.
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From page 317... ...
This intergenerational transmission of positive health impacts implies even more considerable social benefits from the program. These findings strongly indicate that the Medicaid program may be particularly effective in reducing the opportunity gap by race and income in health, educational attainment, and earnings by improving outcomes in adulthood of exposed children, most of whom are likely to be from vulnerable families.
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focus on the expansion of the Medicaid program during the 1980s and estimate that $1.00 in spending on Medicaid recoups 0.90 cents by age 28, meaning that 56% of the expenditure for the 1980s expansion would be paid after 60 years. Reducing the Opportunity Gap Due to Unequal Access to Early Education through the Head Start Program Launched in 1965 as part of the war on poverty, the Head Start program has offered comprehensive child development services for children from low-income families from birth to age 5 with the aim of promoting the school readiness of disadvantaged children.
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Focusing on gains in the accumulation of human capital and improvement in economic selfsufficiency, they estimate that the Head Start program generates positive fiscal externalities by reducing public assistance expenditures and increasing tax revenue (from approximately $576 to $2,331 annually per program participant) as a result of the additional wages earned by the exposed children.
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These benefits accrue at the level of the individual, the family, and society. Analysis of additional policies and programs, while sometimes challenging, is a key area for future research related to understanding the economic costs of the opportunity gap.
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From page 321... ...
Available: https://www.acf.hhs.gov/opre/ report/head-start-impact-study-final-report-executive-summary East, C.N., Miller, S., Page, M., & Wherry, L.R. (2023) . Multigenerational impacts of child hood access to the safety net: Early life exposure to Medicaid and the next genera tion's health. American Economic Review, 113(1)
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From page 322... ...
infant mortality rates. (NCHS Data Brief No.
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