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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.

    () (University of Chicago)

  • Raut, Lakshmi K.

    () (U.S. Social Security Administration)

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 and intergenerational earnings 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 and higher intergenerational earnings and schooling mobility.

Suggested Citation

  • Heckman, James J. & Raut, Lakshmi K., 2013. "Intergenerational Long Term Effects of Preschool: Structural Estimates from a Discrete Dynamic Programming Model," IZA Discussion Papers 7415, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7415
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    1. repec:wfo:wstudy:58553 is not listed on IDEAS
    2. Taganov, Boris, 2014. "FDI and long-term economic growth in Russia," EconStor Preprints 122049, ZBW - German National Library of Economics.
    3. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives," WWWforEurope Working Papers series 44, WWWforEurope.
    4. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2015. "Competitiveness of EU vs. US," WWWforEurope Policy Paper series 29, WWWforEurope.
    5. Anna Makles & Kerstin Schneider, 2017. "Extracurricular educational programs and school readiness: evidence from a quasi-experiment with preschool children," Empirical Economics, Springer, vol. 52(4), pages 1181-1204, June.
    6. repec:jid:journl:y:2018:v:26:i:1:p:1-48 is not listed on IDEAS
    7. Christopher Flinn & Petra Todd & Weilong Zhang, 2017. "Personality Traits, Intra-household Allocation and the Gender Wage Gap," Working Papers 2017-029, Human Capital and Economic Opportunity Working Group.
    8. Andreas Kappeler & Andrés Fuentes Hutfilter, 2014. "Making Economic Growth more Socially Inclusive in Germany," OECD Economics Department Working Papers 1175, OECD Publishing.

    More about this item

    Keywords

    structural dynamic programming; preschool investment; early childhood development; intergenerational social mobility;

    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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