The demands placed on teachers, schools and universities have never been higher; children are supposed to be prepared for the challenges of a global labour market within an extremely short period of time. What is often overlooked here, explains education economist Friedhelm Pfeiffer, is that a child’s development is to a large extent shaped by their family surroundings. Born in 1958, PD Dr. Friedhelm Pfeiffer studied Economics at the Universities of Freiburg, Bern, and Mannheim. After completing his doctorate, he started working at ZEW, where he is acting head of the ZEW Research Department “Labour Markets, Human Resources and Social Policy”. In 2002, he obtained his doctoral degree from the University of Mannheim. His research interests include the effects of optimised investment in education on individual and overall economic returns as well as the causes and consequences of individuals acquiring both cognitive and non-cognitive skills over the course of their lifetime. Pfeiffer is responsible for coordinating projects within the research network “Non-cognitive skills: Acquisition and Economic Consequences”, a research partnership funded by the Pact for Innovation and Research and involving the Universities of Chicago and Konstanz as well as the Centre for the Economics of Education in London and the Socio-economic Panel in Berlin.

Your studies suggest that the period before children start school determines later success in school and at work as well as social development over the course of the child’s life. How is this possible?

Children start to learn at a very early stage in life, even while they are still in the womb. From the first day after being born, children have a remarkable amount of cognitive and motor abilities. These abilities – much like emotions and the ability to self-regulate, i.e. to calm themselves without assistance – may not be developed properly if children do not receive adequate support from their mothers, fathers or other caregivers. It is these early interactions between infants and caregivers in particular which form the basis for later development, since developmental progress is the result of interdependent processes. Successful experiences during one developmental stage encourage success in subsequent stages, whereas failures tend to lead to more failures in the future. This does not occur in a linear fashion, if you consider puberty, for instance, but holds true in most cases. A solid foundation laid during childhood is a valuable advantage that can inspire success in later life. A childhood characterised by little affection and encouragement is, on the other hand, like a wound that can have a negative effect on a child throughout their entire life.

Can educational institutions have a regulating effect on those children whose parents were unsuccessful in fostering their children’s cognitive and non-cognitive skills during preschool years, or are those differences in the children’s ability to perform likely to persist over the course of their lives?

The window for the differentiation of human capabilities remains open for the entire lifetime of a child. However, if children are to succeed in school, it is vital that they receive support from their parents as capable partners throughout the school years. Through high-quality interactions that match the children’s abilities, educational institutions can also help students develop self-regulatory skills, improve motivation and self-confidence and ensure future success. These factors are fundamental for the children’s success in school and for satisfactory integration into society. In practice, the reality in educational facilities is unfortunately rather different. More often than not, schools provide more support to those students who already have a solid foundation, while challenged children that need more attention are left behind.

Which economic consequences will those children who did not receive enough support and attention from their parents have to face?

If they are lucky, they will meet teachers, doctors or other people in society who can provide guidance and direction. For instance, our studies suggest that the labour market in Germany is relatively open. Merit is just as important as connections and family background. Those who have a disadvantage in the labour market in terms of their family background can at least partly offset this drawback through high-level performance – that is the good news. However, for students who are severely disadvantaged due to childhood experiences like difficult family circumstances or physical or psychological violence, the situation is much more complex. Anxiety, depression, disintegration and failure in school are just some of consequences we see among those children who experienced a difficult childhood.

Which approaches should policymakers adopt so as to counteract these negative consequences for individuals as well as the subsequent societal implications, which may occur in the form of high unemployment, low productivity or increased inequality?

It is crucial that education policymakers at the federal level focus on their actual task, which is to help children reach their full potential and ensure equal opportunities. From an economic point of view, two principles should serve as serve as guidelines. First, public resources should be allocated in a way that maximises returns over the course of a lifetime, both for individuals and society as a whole. If decision-makers were to follow this principle, much greater public investment would be made into early childhood education. Second, these funds should be used so as to ensure that the sum of private investments in education is approximately equal to public investment levels by the time children are at the age of ten. According to our studies, students who perform poorly in PISA are currently only receiving 26 per cent of the investments allocated to students with average scores. Education policymakers are acting according to the principle that all children should receive the same amount of public investment. However, the disparity between private levels of investment is, as the figures show, is much more pronounced. As a consequence, family background still has a decisive impact on a child’s success in school and later life.

Our research findings indicate that the outlined education policy approach committed to humanistic ideals also yields economic benefits in the long run. The problem lies, however, in the implementation. An overhaul of education policy will most likely only generate economic returns after a period of 20 to 50 years. The implementation will therefore remain a Herculean task.




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