Long-term Effects of Preschool on School Performance, Earnings and Social Mobility

Abstract

Children from disadvantaged families perform very poorly in school and labour market because they acquire low level of social, motivational and cognitive skills during their early childhood development. Using the NLSY data set, this paper formulates and then estimates the production processes for cognitive skills and non-cognitive skills such as social and motivational skills during early childhood development and the long-term effects of these skills on learning and lifetime earnings of an individual. Using these estimated relationships, the paper provides a calibrated intergenerational altruistic model of parental investment in children's preschool. This dynamic model is then used to estimate the effects of publicly provided preschool to the children of poor socioeconomic status (SES) as a social contract on lifetime earnings distribution, intergenerational college and social mobility, and to estimate the tax burden of such a social contract.

Intergenerational long-term effects of preschool-structural estimates from a discrete dynamic programming model

“…We use the NLSY79 (National Longitudinal Survey of Youth, 1979) and the NLSY79 Children and Young Adults data containing information on a nationally representative sample of parent-child pairs of the US population. This paper extends Raut (2003) by incorporating unobserved heterogeneity and estimating the structural parameters. The paper utilizes the Rust (1987) nested fixed point maximum likelihood estimation procedure.…”

“…We also show the importance of non-cognitive skills in improving school performance and life-time earnings of children, after controlling for their education level, innate ability, and family background. See Raut (2003) for earlier estimates of the effects of cognitive and non-cognitive skills on school performance and earnings along the line of this paper. Almlund et al (2011); Duckworth, Almlund, Kautz, and Heckman (Duckworth et al); Heckman and Kautz (2012) summarize the literature on the effects of non-cognitive traits on earnings.…”

Childhood out-of-home placement and pathways to adult socioeconomic outcomes

“…12,16,17 Both mental health problems and low childhood educational attainment are known risk factors for a wide range of negative social outcomes including low earnings and welfare use. [18][19][20] However, it is unclear whether and to what extent mental health and educational problems explain the poorer socioeconomic outcomes of children placed out-of-home. Answering this question could provide information about whether potential interventions preventing mental health problems and enhancing educational-related outcomes among placed children may contribute to reduce long-term negative socioeconomic consequences of placement.…”

Mortality, Fertility, and Persistent Income Inequality

“…The choice of ex implies IX = 0.67. In the literature, the value of the altruism parameter is commonly chosen to lie between 0.6 and 0.8 (see, e.g., Raut 2003). I choose P = 0.7.…”