Long Term Effects of Preschool Investment on school Performance and Labor Market Outcome

Abstract

Using the NLSY data set, this paper formulates and then empirically estimates the production processes for social, motivational and cognitive skills during early childhood development and the long-term effects of these skills on learning and life-time 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) on college mobility and intergenerational social mobility and to estimate the tax burden of such a social contract.Preschool Investment, Early Childhood Development, Intergenerational Social Mobility, College Mobility