Early Childhood Education
Craig Alexander SVP & Chief Economist October 2012
CANADA HAS AN ESSENTIAL SKILLS CHALLENGE LITERACY IN CANADA 70
Per cent of population with inadequate literacy by category
60
55.1 47.7
50 40
39.3
30 20 10 0 Youth Reading*
Adult Prose**
Adult Numeracy**
* Students aged 15 ** Adults aged 16 and over; Source: Statistics Canada, Learning Metrix Inc.
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ESSENTIAL SKILLS DEVELOPMENT IS CRITICAL n Stronger essential skills: n Increases likelihood of employment n Decreases odds of unemployment n Reduces duration of unemployment n Increases range of occupations n Lifts lifetime earnings n Raises standard of living
HIGHEST RETURN ON INVESTMENT IS EDUCATION OF CHILDREN
Rate of return to investment in human capital
Rates of Return to Human Capital Investment at Different Ages: Return to an Extra Dollar at Various Ages
Programs targeted towards the earliest years
Preschool programs Schooling Job training
0-3
4-5
School
Post-school
Preschool
Age
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THE BENEFITS OF EARLY CHILDHOOD EDUCATION ARE WIDESPREAD
Children
Parents
Economy & Society
THE FIRST 5 YEARS OF LIFE CAN IMPACT ECONOMIC AND SOCIAL SUCCESS n Research has challenged prior misconceptions. Human abilities driven more by environment (80%) than genetics (20%) n Basic abilities can be altered early in life as genes respond to life experiences n It is more difficult to improve a child s learning abilities later in life
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PRE-PRIMARY EDUCATION PROGRAMS IMPROVE COGNITIVE AND LANGUAGE DEVELOPMENT
Increase by 1% the proportion of students who attend preprimary education
Increase the duration of preprimary education by 1 year
Reduce pupils-to-teacher ratio in pre-primary school by 1 student
Spend an extra dollar (PPP) on preprimary education
0
2
4
6
8
10
12
Score Point Difference on PISA Results Source: OECD
LEADING TO BETTER EDUCATIONAL PERFORMANCES Five-Year-Olds, % 40
Grade retention rate (grades 1-8)
35
% funding for special education
30
Canadian high school dropout rate
25 20 15 10 5 0 All Children
Participants
Source: Child Care Human Resources Sector Council; 2005
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ECONOMIC AND SOCIAL OUTCOMES ALSO IMPROVE
ECONOMIC AND SOCIAL OUTCOMES Participants* (%) Control Group (%) Smoked Used hard drugs Used soft drugs Treated for drug/drinking problems Owned a home Owned a car Had life insurance
41.5 22.2 45.3 22.2 36.7 73.8 66.5
50.7 29.3 54.4 33.9 26.6 60.9 53.8
Source: Child Care Human Resources Council *Participants of the High/Scope Perry Pre-School Program
ALL CHILDREN BENEFIT FROM ECE, BUT DISADVANTAGED CHILDREN BENEFIT MORE % Vulnerable by Socio-Economic Status 35%
30%
25%
20%
15%
10%
5%
0% Low
Moderate Middle Family Income
High
Source: Report to the Premier by the Special Advisor on Early Learning, Charles E. Pascal
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ECE PROGRAMS ALLOW MOTHERS TO WORK, INCREASING FAMILY INCOME Participation Rate of Women with Children Dual-parent family
90%
Single-parent family
85% 80% 75% 70% 65% 60% 55% 50% Child less than 6 years old
Child 6-15 years old
Source: Statistics Canada, 2011
BUILDING A BETTER WORKFORCE FOR THE FUTURE IS KEY GIVEN CHANGING DEMOGRAPHICS Baby Boomer Generation Share of the Labour Force 40% 38% 36% 34% 32% 30% 28% 26% 24% 22% 20% 1976
1980
1984
1988
1992
1996
2000
2004
2008
2012
Source: Statistics Canada; Baby Boomer defined as Ages 45-64.
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ECONOMY NEEDS MORE SKILLED WORKERS n Population is aging, labour force growth is slowing n Labour shortages will be encountered n Virtually all net job creation will be for PSE graduates n Life-long learning and skills development will be critical n Economy must compete on value-added output, which will demand higher skills n Increasing productivity is essential, and won t be successful without highly educated workers
COMPARED TO OTHER INDUSTRIES, ECE PROVIDES A LARGE RETURN TO THE BROADER ECONOMY Employment Multiplier Jobs per $Million
GDP Multiplier per Dollar Increase in Output Employment (lhs)
50
GDP (rhs)
1.0
Pro
Min ing
Fis
FIR
Ma nu
foo m. &
He alt
uca t Ed Ac co
ou tsid e car e Ch ild
E
0.5 Util itie s
0 fac tur ing
0.6
hin g
10
Fo res try
0.7
hc are Ag ric ult ure f. & tec h. s erv ice s Go ver nm ent Wh ole sale tra de Tra nsp ort atio n Co nst ruc tio n
20
Re cre atio n Re tail tra de
0.8
ion
30
ds erv ice s
0.9
ho me
40
Industry
Source: Child Care Human Resources Sector Council
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AND CAN RESULT IN LOWER SOCIAL COSTS Estimated Annual Cost of One Highschool Dropout, $ 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Social Assistance
Crime
Tax revenue Revenue loss Employment loss in employment insurance cost insurance premium
Source: Canadian Council on Learning
MANY STUDIES SHOW THE BENEFITS OUTWEIGH THE COSTS STUDIES OF COST-BENEFIT ANALYSIS OF ECE PROGRAMS Study
Benefit / Cost ($)
Economic Consequences of Quebec's Educational Child Care Policy, by Fortin, Godbout & St-Cerny, 2011
1.49
Better Beginnings, Better Futures by Peters et al., 2010
2.00
Worforce Shortages Socio-Economic Effects, by Fairholm, 2009
2.42
Child Care as Economic and Social Development, by Prentice, 2007
2.78
The Benefits and Costs of Good Child Care, by Cleveland & Krashinsky, 1998
2.00
Source: Early Years Study
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BUT THERE ARE LIMITATIONS TO THESE FINDINGS n Costs can run over budget n Quantifying benefits is difficult § Several assumptions made § In the long run, things change – many unknowns
n External factors can affect results n Location and program design/implementation matter
ALL RESULTS TELL SAME STORY n All studies show that benefits are greater than the costs despite analyzing different programs n In most parts of Canada, there is a gap between the end of parental leave and formal schooling n Evidence that accessibility and cost are key issues n Current system is fragmented n Suggests increased investment and maximizing impact of the system would be beneficial
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WHILE UNEVEN ACROSS THE COUNTRY, THERE IS PUBLIC FUNDING FOR ECE PROGRAMS ECE Budget as a % of 2011-12 Provincial & Territorial Budgets 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 NL
PE
NS
NB
QC
ON
MB
SK
AB
BC
NT
YK
NU
Source: Early Years Study
DESPITE EFFORTS TO IMPROVE AFFORDABILITY, SOME FAMILIES STILL UNABLE TO PARTICIPATE Children Age 0-5 with no out-of-home care 70%
60%
50%
40%
30%
20%
10%
0% Poor
Low-Moderate Moderate Family Income
Affluent
Source: Early Years Study
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PUBLIC SPENDING IN CANADA HAS FALLEN SHORT OF MANY OF ITS PEERS Public Expenditure on ECE services as % of GDP 2.5%
2.0%
1.5%
1.0%
0.5%
ga ry Fr an ce Fi nl an d N or w ay Sw ed en D en m ar k
tr ia
H un
U K
A us
U S
Ita ly G er m N a ny et he rla nd s
a ad
A us
C an
tr al ia
0.0%
Source: OECD
AND PARENTS COVER MORE OF THE COSTS THAN OTHER COUNTRIES % of program costs paid by parents 80 70 60 50 40 30 20 10 0 KR US
IE
CA CZ UK NL PT BE AU FR DK AT NO
IT
FI
DE SE HU
Source: ChildCare Resource and Research Unit
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ALL THIS SUGGESTS THAT CANADA IS UNDERINVESTING
n To move more in line with other comparable OECD countries, public investment in early childhood education in Canada would have to rise by $3-4 billion
BUT GOVERNMENTS NOT IN POSITION TO BOOST SPENDING ALL PROVINCES & TERRITORIES % of GDP
% of GDP Budget Balance (left)
2
Net Debt (right)
35
1
30
0
25
-1
20
-2
15
-3
10
-4
5 87-88
90-91
93-94
96-97
99-00
02-03
05-06
08-09
11-12E
Source: Federal Fiscal Reference Tables
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BOTTOM LINE
n Investment in education is the ultimate tool to address many economic and social challenges n Once fiscal balance sheets are back in order, policymakers should consider moving early childhood education higher on the priority list
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