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Daniel Trefler, Rotman School of Management April 18, 20231
Looking Backward: How Childhood Experiences Impact a Nation’s Wealth
Daniel Trefler
Rotman School of Management
Rotman Life-Long Learning Lectures 2003April 18, 2023
Daniel Trefler, Rotman School of Management April 18, 20232
Introductory Notes
Children’s issues play a surprising role in Canadian productivity, particularly in the set of policies we need to make Toronto the wealthiest city in North America and Canada the richest jurisdiction in the world.
Having studied the range of policies needed to meet these goals, I now understand that there is no single policy, no magic bullet that will propel us forward. Instead, there is a set of complementary policies, policies that reinforce one another, that must be put into place. Several of these policies involve investing in people and that is how I come to early childhood research.
Daniel Trefler, Rotman School of Management April 18, 20233
Introductory Notes
By the time I have finished I hope to have persuaded you of three facts:1. Our understanding of why early childhood interventions are
successful is based on hard-nosed science. In the last decade, research on animal models and fundamental human biological processes have revolutionized our understanding of ourselves and placed early development issues at the forefront.
2. Cost effective investments in people are ones targeted early on in the life course.
3. Early childhood interventions are a touchstone for many important productivity-enhancing policies that this country must implement if it is to become the world’s best place to live.
Daniel Trefler, Rotman School of Management April 18, 20234
Introductory Notes
Overview of talk:
1. Human capital formation, especially a university education, is fundamental in the new economy. I will use this as an extended example of how early childhood experiences force us to rethink post-secondary education policy.
2. I will review just three hard scientific findings that shed light on the role of early childhood education. These are early brain plasticity, the stress system, and serotonin metabolism.
3. I will return to the broader question of how childhood interventions complement a host of productivity-enhancing policies that Canada must consider if it is to become the most desirable location in the world in which to live.
Daniel Trefler, Rotman School of Management April 18, 20235
Part 1. Post-Secondary Education Policy
Why do poor teens fail to enroll in post-secondary
institutions?
Daniel Trefler, Rotman School of Management April 18, 20236
Human Capital is strongly associated with growth
Slope = 0.69
R2 = 0.704
5
6
7
8
9
10
11
-2 -1 0 1 2 3 4 5
(Log of % of Population Educated, 1990)
(Lo
g o
f Per
Cap
ita G
DP
, 199
0)
Wea
lth
Post-Secondary Education
Source: Author’s calculations based on PWT and Barro-Lee
Daniel Trefler, Rotman School of Management April 18, 20237
0%
10%
20%
30%
40%
50%
60%
70%
80%
Poor Family (Bottom IncomeQuartile)
Rich Family Top Income Quartile)
Canadian Post-Secondary Participation Rates by Income: Evidence of Credit Constraints or Lack of Demand?
Why the difference: poor early childhood experiences limit demand? Tamara Knighton and Sheba Mirza, “Postsecondary Participation: The Effects of Parent’s Education and Household Income” Education Quarterly Review, 2002, Vol. 8(3). ‘Poor’ (‘Rich’) means in the bottom (top) quartile of the after-tax household income distribution.
Teens FromPoor Families
Teens FromRich Families
25%
Daniel Trefler, Rotman School of Management April 18, 20238
U.S. Post-Secondary Enrollment for Bright Teens:After adjusting for early experiences, income does not matter
Poor
PoorRich Rich
0%
20%
40%
60%
80%
100%
No Adjustments Adjusted for Parents'education, broken
home
21% 4%
• Bright Teen: Top third of 12 year old students who took the High Armed Forces Qualifying Test (AFQT). • Source: Heckman and Carneiro, “Human Capital Policy” NBER working paper.
Daniel Trefler, Rotman School of Management April 18, 20239
Additional Notes
I can do a similar analysis for: High school graduation Grade 10 math streaming Readiness to learn in JK Cognitive and non-cognitive test scores at the
earliest ages.
Daniel Trefler, Rotman School of Management April 18, 202310
7%
36%
71%
35%
13%
54%
-5% 15% 35% 55% 75%
5 or more arrests by age 27
Homeowner at 27
High school graduate (or GDE)
Program Participants Control Group
High/Scope Perry Preschool Project - major findings at age 27Early Childhood Interventions: Perry Preschool Program
Sample consists of disadvantaged, low-IQ children, ages 3-4, from Ypsilanti, Michigan. Children were provided with an enriched environment during ages 3-4 and then followed, along with a control group, for 35 years. Source: Schweinhart et al. (1993)
+17%
+23%
-28%
Daniel Trefler, Rotman School of Management April 18, 202311
Control Control
Program Program
0%
20%
40%
60%
80%
100%
Social Competence CognitiveDevelopment
“Readiness to Learn” Program in Toronto
28% 23%
Source: McCain and Mustard, Three Years After
SocialCompetence
CognitiveDevelopment
Daniel Trefler, Rotman School of Management April 18, 202312
ROI for Human Capital Investments During the Life Course
Rat
e o
f R
etu
rn o
n I
nve
stm
ent
Early Childhood
K-12
Post-Secondary
Work-Force
Age
Human capital accumulation is a dynamic process. The skills acquired in one stage of the life cycle affect learning at the next stage.
Remediation of early childhood opportunities is very expensive.
Daniel Trefler, Rotman School of Management April 18, 202313
Part 2. Basic Science
What explains whyeducational interventionsare more cost effectiveearly in the life course?
1. Brain ‘Plasticity’2. The ‘Stress System’
3. Serotonin Metabolism
Daniel Trefler, Rotman School of Management April 18, 202315
The Stress System: Coping With Challenges (1)
Daniel Trefler, Rotman School of Management April 18, 202316
Mean Swimming Distance to the Platform
0
2
4
6
8
10
12
14
16
6 12 24
Source: Sapolsky, 1992, figure 12.8
Age (In Months)
Dis
tan
ce (
In M
etre
s) Non-Handled Rats
Handled Rats
Daniel Trefler, Rotman School of Management April 18, 202317
Evidence on IQ – Romanian Orphans
0
20
40
60
80
100
120
DevelopmentalQuotient
Communication Socialization Motor Skills
Non-Instit (<6 months) Institut. Adopt. (>6 months)
VINELAND MEASURESVINELAND MEASURES
Note that institutional adoptions <6 months do much better than >6 months
Daniel Trefler, Rotman School of Management April 18, 202318
Evidence on Aggression – Knock-Out Rhesus Macaques
Control group: Offspring raised by biological mother display the usual aggressive behaviour.
Treatment group: Offspring adopted by highly nurturing mothers displayed healthy exploration of their environment, coped better with stress, and were less upset about weaning. There were also marked improvements in serotonin metabolism.
Daniel Trefler, Rotman School of Management April 18, 202319
Part 3. Policy Complementarities
Early childhood interventionscomplement other
productivity-enhancingpolicies that
Canada must adopt.
Daniel Trefler, Rotman School of Management April 18, 202320
InnovationAgenda
• Universities
Productivity
• Worker Quality
EarlyChildhood
Daniel Trefler, Rotman School of Management April 18, 202321
Work Ethic
Teamwork
Communication
Problem Solving
0 10 20 30 40 50 60
Wor k E thi c
T eamwor k
Communication
P r oblem Solving
Human Resources: Canada’s Skill Shortage
Source: Education and Knowledge: Some Perspectives from 21st Century Manufacturing, Canadian Manufacturers and Exporters
Daniel Trefler, Rotman School of Management April 18, 202322
Health
InternationalTrade
InnovationAgenda
• Universities
Productivity
• Worker Quality
Cities• Infrastructure• Clusters• Immigration• Quality of Life
EarlyChildhood
Daniel Trefler, Rotman School of Management April 18, 202323
Early Childhood Research as a Touchstone
Universities and tuition
Cities: invest in people, not infrastructure. Do so through community-based interventions (e.g., schools) Added bonus: reduce crime and poverty.
Immigration stress, acculturation
Human resource development: a coworker who performs poorly in the stressful world of high-tech innovations, who shows little curiosity, reacts aggressively, and is not particularly bright?
International trade: We do not want workers whose skills compete with those of low-wage
foreigners.
Daniel Trefler, Rotman School of Management April 18, 202325
Suggested Readings
1. Pedro Carneiro and James Heckman, “Human Capital Policy” National Bureau of Economic Research Working Paper #9495, February 2003. This paper evaluates the cost effectiveness of investments in people at
various stages of the life course. Heckman is a Nobel Laureate who specializes in evaluating training programs. Available on the web at http://www.nber.org/papers/w9495.
2. Bruce McEwen, “Stress and the Brain” in States of Mind: New Discoveries about How Our Brains Make Us Who We Are edited by Roberta Conlan, pages 81-102. The entire book was written by the leading scientists in the field and
then re-written by journalists in order to make it a pleasure to read.
3. Margaret McCain and Fraser Mustard, Government of Ontario Early Years Study: Reversing the Real Brain Drain, April 1999. Available on the web at http://
www.gov.on.ca/CSS/page/services/oey/earlyYearsStudy.pdf.
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