Association for Public Policy Analysis & Management

Head Start (HS) has served low-income children for more than 50 years, yet the effectiveness of the program is still an open question. To shed new light on the ongoing debate, this paper presents new evidence on the effect of exposure to HS on economically disadvantaged children’s third grade test scores. In this paper, I utilize previously unexplored variation, local community federal funding expansions in the 1990s, to identify the effect of HS. During the 1990s, the federal government doubled the funding for HS with the aim of improving both quality and capacity. The significant funding expansion within a relatively short time created a natural experiment that resulted in large variation in the program funding expansions across communities and over time. I ask to what extent did federal HS funding expansions in the 1990s make a difference for student performance in Texas? How does the effectiveness of the HS program relate to the way HS funds are spent? To investigate these issues, I use unique student-level data on academic performance, and student backgrounds, together with grantee-level HS budgets during the period from 1988 to 1995.

I find that exposure to more generous Head Start funding at age four significantly improves test scores in third grade through fifth grade for low-income children, in particular students from academically disadvantaged backgrounds. I show that HS benefits Hispanics with limited language proficiency the most and that a 500 dollar increase in Head Start funding per child closes about 15% of the raw test score gap between Hispanics and whites.

An investigation into the mechanisms behind the test score gains reveals that both program capacity and quality improvements are responsible. I show that funding expansions translated into large and significant increases in HS enrollment. Moreover, I find that federal funding improved child-teacher ratios, child-staff ratios, full-time enrollment, and education spending increases in the HS programs.

This study provides new evidence that furthers our understanding of the long-standing question of lasting benefits of the HS program. Additional analyses of the efficacy of the program provide extra insight for policymakers considering future public investments in early childhood education. Early childhood investments are currently receiving significant political attention, and it is important for policymakers to be able to measure the benefits of the program, not only on cognitive outcomes, but also on non-cognitive, health and labor market outcomes. My findings suggest that additional federal funding exposure to HS significantly improves test scores for low-income children. In addition, a conservative analysis indicates that HS passes the cost-benefit test by a big margin.