Community Development

Investment in Poverty Stricken Children Increases CT’s Earning Potential


A new study released by the National Bureau of Economic Research (NBER) explores the potential economic impact of giving children in poverty more support and opportunities to help them achieve higher earning potential in adulthood, therefore contributing more to the economy and tax base. In a blog posting for Connecticut Voices for Children, Orlando Rodriguez considers the impact the findings from this report would have for the state of Connecticut.

According to the report, investing in children living in low income neighborhoods is an economically beneficial move resulting in these children achieving the earning capacity of typical children, which would then create more private sector jobs as they spend more and create more tax revenues for the state.

Connecticut’s 2011 personal income was $204 billion. Based on the study’s estimate that Connecticut could increase total disposable income by 1.28 percent if we invest more in children who live in poverty, these children could contribute an additional $2.6 billion in potential future income to Connecticut’s economy.

However, the percentage of children living in poverty in Connecticut has increase from 10.2% in 2001 to 14.9% in 2011. Rodriguez indicates that while this is the current trend, it can still be reversed. The NBER has a few suggestions for how states and municipalities can try to decrease the poverty rate of children such as lowering marginal tax rates for low income parents so they have more money to benefit their children.

Rodriguez also cites findings from a State Department of Education report that estimates an additional annual investment of $43.8 million would be needed to provide high-quality universal preschool for all low-income children in CT’s poorest districts. Rodriguez points out that while this amount may seem like a large sum of money, it is a small investment in order to help these children achieve their full economic potential and increase the state’s annual disposable income by $2.6 billion.

Orlando Rodriguez’s blog can be accessed here

Click here to access the National Bureau of Economic Research Report.

Click here to read the report from the State Department of Education.



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