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

James Heckman and Lakshmi K. Raut ()
Additional contact information
Lakshmi K. Raut: U.S. Social Security Administration

No 7415, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: intergenerational social mobility; early childhood development; preschool investment; structural dynamic programming (search for similar items in EconPapers)
JEL-codes: I21 J24 J62 O15 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2013-05
New Economics Papers: this item is included in nep-dge, nep-edu and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Published - published in: Journal of Econometrics , 2016, 191 (1), 164 - 175

Downloads: (external link)
https://docs.iza.org/dp7415.pdf (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp7415

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().