A decade has passed since the passage of the federal Elementary and Secondary Education Act (ESEA) of 1965. Current federal expenditures for compensatory education under that act now exceed $1.5 billion annually. Those expenditures are largely focused on children in the elementary grades, in particular, kindergarten through grade three.' A major objective of compensatory education programs can be viewed as reducing poverty by increasing the human capital stocks of students at the end of their school-lives (i.e., the terminal human capital stock). Proponents of early childhood intervention programs expect terminal human capital stocks to be higher when limited resources are reallocated from later to earlier grade levels. However, empirical research has by and large failed to fulfill this expectation. Evaluations of early childhood intervention programs like Headstart have generally produced inconclusive results (Cicirelli, 1969; Bronfenbrenner, 1974; Ryan, 1974).2 There are several possible explanations for this finding, but the one explored in this research is low marginal productivity, with respect to the stock of terminal capital, of school inputs received in the early grades. While the conventional belief among psychologists and educators has been that this productivity is high (Hunt, 1961; Bloom, 1964), others have argued that the marginal product of school inputs in producing terminal capital is higher in the adolescent years than the early childhood years (Rohwer, 1971). If the latter view is correct, compensatory education programs should maximize terminal capital by increasing school resources in the secondary grades, not the early elementary grades. The purpose of this article is to estimate the productivity of school inputs over time for both and children. The estimates obtained will have implications for the optimal allocation of limited school resources over the school-life.3 In the case of disadvantaged children, the estimates provide one possible explanation for the presumed failure of compensatory, early childhood education programs. In the case of advantaged children, the results offer one prediction of the success of non-compensatory, early childhood education, which is receiving increasing political support these days. The model of human capital accumulation is derived and described in the next section, followed by a discussion of the data and sample used in the estimation of the model. Subsequently, the estimated results are presented, and the policy implications of the results are explored.