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

Heckman, James and Raut, Lakshmi (2002): Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model.

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Abstract

Using the NLSY79 and the NLSY79 Children and Young Adults datasets, this paper formulates, provides conditions for parametric and non-parametric identification and empirically estimates the parameters of an altruistic model of parental preschool investment within a structural dynamic programming framework. It then examines the effect of a publicly provided preschool policy to disadvantaged children on their educational and labor market achievements, and also on the inter-generational long-term effects on social mobility, college mobility, and earnings inequality. The paper calculates the tax burden of such a social contract policy, taking into account these intra- and inter-generational effects.

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