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Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model

Author

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  • James J. Heckman
  • Lakshmi K. Raut

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

  • James J. Heckman & Lakshmi K. Raut, 2013. "Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model," NBER Working Papers 19077, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19077
    Note: CH ED TWP
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    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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    Cited by:

    1. Shannon Monahan & Sally Atkins-Burnett & Barbara A. Wasik & Lauren Akers & Felicia Hurwitz & Judith Carta, 2015. "Developing a Tool to Examine Teachers' Use of Ongoing Child Assessment to Individualize Instruction," Mathematica Policy Research Reports 92534e43eaeb4ec39398b9fc8, Mathematica Policy Research.
    2. Julia Bock-Schappelwein & Ulrike Famira-Mühlberger, 2021. "Ausmaß und Effekte von Schulschließungen. Österreich im internationalen Vergleich," WIFO Research Briefs 15, WIFO.
    3. Wang, Jiyuan & Alessie, Rob & Angelini, Viola, 2025. "Why do parents underinvest in their children’s education? Evidence from China," Economics of Education Review, Elsevier, vol. 107(C).
    4. Zhao, Qiran & Wang, Xiaobing & Rozelle, Scott, 2019. "Better cognition, better school performance? Evidence from primary schools in China," China Economic Review, Elsevier, vol. 55(C), pages 199-217.
    5. John Gardner, 2020. "Intergenerational altruism in the migration decision calculus: evidence from the African American Great Migration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(1), pages 115-154, January.
    6. Takahiro Ito & Kohei Kubota & Fumio Ohtake, 2022. "Long-term consequences of the hidden curriculum on social preferences," The Japanese Economic Review, Springer, vol. 73(2), pages 269-297, April.
    7. Shannon Monahan & Sally Atkins-Burnett & Barbara A. Wasik & Lauren Akers & Felicia Hurwitz & Judith Carta, "undated". "Developing a Tool to Examine Teachers' Use of Ongoing Child Assessment to Individualize Instruction (updated report)," Mathematica Policy Research Reports 43630ca15a5e446eafc033751, Mathematica Policy Research.
    8. Banerjee, Mahasweta M. & Friedline, Terri & Phipps, Barbara J., 2017. "Financial capability of parents of kindergarteners," Children and Youth Services Review, Elsevier, vol. 81(C), pages 178-187.
    9. Massimiliano Agovino & Massimiliano Cerciello & Aniello Ferraro & Antonio Garofalo, 2022. "A Regional Perspective on Social Exclusion in European Regions: Context, Trends and Policy Implications," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(2), pages 409-433, July.
    10. Janeli Kotzé, 2015. "The readiness of the South African education system for a pre-Grade R year," Working Papers 15/2015, Stellenbosch University, Department of Economics.
    11. 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.
    12. Thorsten Moenig, 2021. "Efficient valuation of variable annuity portfolios with dynamic programming," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(4), pages 1023-1055, December.
    13. Flinn, Christopher J. & Todd, Petra E & Zhang, Weilong, 2018. "Personality traits, intra-household allocation and the gender wage gap," European Economic Review, Elsevier, vol. 109(C), pages 191-220.
    14. Andreas Kappeler & Andrés Fuentes Hutfilter, 2014. "Making Economic Growth more Socially Inclusive in Germany," OECD Economics Department Working Papers 1175, OECD Publishing.
    15. Moeeni, Safoura & Wei, Feng, 2022. "The labor market returns to unobserved skills: Evidence from a gender quota," CLEF Working Paper Series 53, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    16. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2015. "Competitiveness of EU versus USA. WWWforEurope Policy Paper No. 29," WIFO Studies, WIFO, number 58553.
    17. Taganov, Boris, 2014. "FDI and long-term economic growth in Russia," EconStor Preprints 122049, ZBW - Leibniz Information Centre for Economics.
    18. Trofimov, Ivan D. & Baawi, Nurulhana A., 2020. "Human Capital: State of the Field and Ways to Extend the Concept," MPRA Paper 107039, University Library of Munich, Germany.
    19. Lakshmi Raut, 2018. "Long-term Effects of Preschool on School Performance, Earnings and Social Mobility," Studies in Microeconomics, , vol. 6(1-2), pages 24-49, June.
    20. Julia Bock-Schappelwein & Ulrike Famira-Mühlberger, 2021. "Die COVID-19-Pandemie und Schule. Eine bildungsökonomische Kurzanalyse," WIFO Studies, WIFO, number 67333.
    21. Jose Cuesta & Mario Negre & Ana Revenga & Maika Schmidt, 2018. "Tackling Income Inequality: What Works and Why?," Journal of Income Distribution, Ad libros publications inc., vol. 26(1), pages 1-48, March.
    22. Cozzi, Guido & Francesconi, Marco & Lundberg, Shelly & Mantovan, Noemi & Sauer, Robert M., 2018. "Advancing the economics of gender: New insights and a roadmap for the future," European Economic Review, Elsevier, vol. 109(C), pages 1-8.
    23. Flinn, C. & Todd, P. & Zhang, W., 2020. "Personality Traits, Job Search and the Gender Wage Gap," Cambridge Working Papers in Economics 2053, Faculty of Economics, University of Cambridge.
    24. Yu, Yewen & Gong, Liutang & Yi, Junjian, 2025. "Globalization raises intergenerational inequality transmission in chinese villages," Journal of Comparative Economics, Elsevier, vol. 53(3), pages 627-642.

    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • 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

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