Time investment responses of parents and students to school inputs

The paper studies how households respond to school quality. I combine large-scale administrative and survey data from Chile to estimate parental and child time investment responses to classroom inputs and teachers from fourth to tenth grade. Since classroom inputs are not directly observable, I estimate a dynamic skill formation technology that provides classroom and teacher effects as a by-product, in a similar fashion as value-added models. I address selection by leveraging repeated observations of students and rich data on factors involved in household decisions. Parents of fourth graders compensate for low quality teachers and classroom inputs, while parents of high school students reinforce the quality of these inputs. Students, on the other hand, increase time self-investment if their classroom environment improves at every grade, but the responses are larger for older children.