Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/334674 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18259
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper shows how the Marginal Value of Public Funds (MVPF) can guide treatment allocation to improve social welfare. Under budget constraints, the optimal treatment targets individuals with MVPFs above a threshold that minimizes the opportunity cost of treatment. Using experimental data, we show that prioritizing high-MVPF groups under tight budgets can double Head Start's social benefits compared to random assignment. Analyzing joint allocation across early (Head Start) and late (Job Corps) skill investment programs, we find that exclusive investment in early interventions is not optimal unless substantially higher welfare weights are placed on young children.
Subjects: 
Marginal Value of Public Funds (MVPF)
treatment allocation
budget constraints
welfare maximization
JEL: 
H43
I38
D61
J68
I26
Document Type: 
Working Paper

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