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

James Heckman and Lakshmi K. Raut

No 19077, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: I21 J24 J62 O15 (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-edu, nep-ltv, nep-neu and nep-ure
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Published as 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.

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Related works:
Journal Article: Intergenerational long-term effects of preschool-structural estimates from a discrete dynamic programming model (2016)
Working Paper: Intergenerational Long Term Effects of Preschool: Structural Estimates from a Discrete Dynamic Programming Model (2013)
Working Paper: Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model (2009)
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