Redistributional consequences of early childhood intervention.

Recently, early investment in the human capital of children from socially disadvantaged environments has attracted a great deal of attention. Programs of such early intervention, aimed at children's health and well-being, are spreading considerably in the US and are currently being tested in several European countries. In a discrete version of the Mirrlees model with a parents' and a children's generation, we model the intra-generational and the inter-generational redistributional consequences of such intervention programs. It turns out that the parents' generation loses whenever such intervention programs are implemented. Furthermore, the rich part of the children's generation always benefits. Despite the expectation that early intervention puts the poor descendants in a better position, our analysis reveals that the poor among the children's generation may even be worse off, if the effect of early intervention on their productivity is not large enough.