Evaluating Public Programs with Close Substitutes: The Case of Head Start
This paper empirically evaluates the cost-effectiveness of Head Start, the largest early-childhood education program in the United States. Using data from the Head Start Impact Study (HSIS), we show that Head Start draws roughly a third of its participants from competing preschool programs, many of which receive public funds. Accounting for the public savings associated with reduced enrollment in other subsidized preschools substantially increases estimates of the program's rate of return. To parse Head Start's test score impacts relative to home care and competing preschools, we selection correct test scores in each care environment using excluded interactions between experimental offer status and household characteristics. We find that Head Start's effects are greater for children who would not otherwise attend preschool and for children that are less likely to participate in the program.
We thank Danny Yagan, James Heckman, Nathan Hendren, Magne Mogstad, Jesse Rothstein, Melissa Tartari, and seminar participants at UC Berkeley, the University of Chicago, Arizona State University, Harvard University, Stanford University, the NBER Public Economics Spring 2015 Meetings, Columbia University, UC San Diego, Princeton University, the NBER Labor Studies Summer Institute 2015 Meetings, Uppsala University, MIT, and Vanderbilt University for helpful comments. Raffaele Saggio provided outstanding research assistance. We also thank Research Connections for providing the data. Generous funding support for this project was provided by the Berkeley Center for Equitable Growth. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Patrick Kline & Christopher R. Walters, 2016. "Evaluating Public Programs with Close Substitutes: The Case of Head Start," The Quarterly Journal of Economics, vol 131(4), pages 1795-1848. citation courtesy of