The Impact of the Business Cycle on Kindergarten Enrollment

Douglas A. Herman
2007 Social Science Research Network  
For some 5-year-olds, waiting an additional year beyond the designated age of eligibility for kindergarten enrollment can potentially result in long-term academic benefits. Although delayed entry affords an opportunity for further social and intellectual development prior to the start of formal education, there is a significant financial and time burden associated with not enrolling once legally eligible, specifically the cost of daycare, preschool, or home care; the next best alternatives to
more » ... t alternatives to public elementary school. This study examines the impact of the business cycle on the timing of enrollment. I find that a two-percentage point increase in the state unemployment rate increases kindergarten enrollment by 1.0 percentage point. The largest effect is observed among 5year-old boys from middle to low skilled households; those hit hardest by short-term economic fluctuations. To explore a potential mechanism through which this effect may arise, I propose an instrumental variables (IV) approach to identify the causal effect of fluctuations in household resources due to the business cycle on the timing of kindergarten enrollment. Based on this approach, I find that a $1,000 decrease in household income due to a one-standard deviation increase in the state unemployment rate increases kindergarten enrollment by 1.1 percent. I am indebted to Kelly Bedard for many helpful suggestions and guidance during the course of this research project. I also thank
doi:10.2139/ssrn.1140244 fatcat:fxvkwq3ep5bslbudly2l5fbude