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

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Area of Science:

  • Economics
  • Developmental Psychology
  • Sociology

Background:

  • Parental investment in early childhood education is crucial for skill development.
  • Existing earnings functions may not fully capture the impact of early skills.
  • Understanding intergenerational mobility requires analyzing early childhood interventions.

Purpose of the Study:

  • To model and estimate the impact of preschool investment on child development and long-term outcomes.
  • To re-evaluate the rate of return to schooling by incorporating non-cognitive skills.
  • To assess the societal economic and mobility impacts of a universal free preschool program.

Main Methods:

  • Structural dynamic programming model of parental preschool investment decisions.
  • Empirical estimation using the National Longitudinal Survey of Youth 1979 (NLSY79) data.
  • Analysis of equilibrium Markov process for earnings and schooling mobility.

Main Results:

  • Preschool investment significantly enhances both cognitive and non-cognitive skills.
  • Skills acquired in preschool lead to improved earnings and educational attainment.
  • Standard Mincer earnings functions overestimate the returns to schooling due to omitted non-cognitive skills.
  • A tax-financed, free preschool program for disadvantaged children yields positive societal net gains, including increased earnings and mobility.

Conclusions:

  • Early childhood education, specifically preschool, is a high-return investment for individuals and society.
  • Incorporating non-cognitive skills provides a more accurate assessment of educational returns.
  • Universal access to preschool programs can effectively promote socioeconomic mobility and economic growth.