Short-Run Economic Effects of Michigan's State-Funded Preschool Programs

Authors

Timothy J. Bartik, W.E. Upjohn Institute for Employment ResearchFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-6238-8181

Publication Date

2-19-2025

Series

Policy Paper No. 2025-034

DOI

10.17848/pol2025-034

Abstract

This policy paper estimates the short-run economic effects of the Great Start Readiness Program (GSRP), Michigan’s state-funded preschool program for 4-year-olds. The paper considers 15year effects on state residents’ per capita incomes due to impacts on employment rates and real wages, as well as cost-savings from free preschool and fiscal benefits due to tax base expansion. These 15-year effects ignore the program’s outcomes for child participants and focus on how the Michigan economy is affected by GSRP’s direct impacts on parents and preschool teachers. The estimates use a regional econometric model of a state’s economy, developed originally to evaluate economic development programs. Based on simulations of this model, GSRP has short-run economic effects that are 1.72 times program costs. Most of these benefits are due to increases in state residents’ earnings, due to higher employment rates and wages. However, fiscal benefits for state and local governments offset 17 percent of GSRP’s program costs. Most short-run economic effects for Michigan residents are attributable to GSRP making it easier for parents to work more hours.

Issue Date

February 2025

Note

Upjohn project #58505

Subject Areas

EDUCATION; Early childhood; Preschool and early education; LABOR MARKET ISSUES; Michigan studies; Wages, health insurance and other benefits