Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80643
Authors: 
Heckman, James J.
Raut, Lakshmi Kanta
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Paper 7415
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.
Subjects: 
preschool investment
early childhood development
intergenerational social mobility
structural dynamic programming
JEL: 
J24
J62
O15
I21
Document Type: 
Working Paper

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