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Intergenerational long-term effects of preschool-structural estimates from a discrete dynamic programming model

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  • Heckman, James J.
  • Raut, Lakshmi K.

Abstract

This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right-hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution, intergenerational earnings mobility, and schooling mobility. The paper finds that a tax-financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings, higher intergenerational earnings mobility, and schooling mobility.

Suggested Citation

  • Heckman, James J. & Raut, Lakshmi K., 2016. "Intergenerational long-term effects of preschool-structural estimates from a discrete dynamic programming model," Journal of Econometrics, Elsevier, vol. 191(1), pages 164-175.
  • Handle: RePEc:eee:econom:v:191:y:2016:i:1:p:164-175
    DOI: 10.1016/j.jeconom.2015.10.001
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    1. Intergenerational Long Term Effects of Preschool – Structural Estimates from a Discrete Dynamic Programming Model
      by maximorossi in NEP-LTV blog on 2013-06-12 01:46:30

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    More about this item

    Keywords

    Preschool investment; Early childhood development; Intergenerational social mobility; Structural dynamic programming;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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