Early Skill Effects on Parental Beliefs, Investments, and Children’s Long-Run Outcomes

Abstract

This work examines the effects of early skill advantages on parental beliefs, investments, and children’s long-run outcomes measured up to age 27. We exploit exogenous variation in skills due to school entry rules, combining 20 years of Chilean administrative records with a regression discontinuity design. Our results show that these rules shift parental beliefs and increase their material investments. Children benefited from the early skill advantage have higher in-school performance and college entrance scores and sizable effects on college attendance and enrollment at selective institutions. These long-run effects are more pronounced for low-income families and likely mediated by parental beliefs and material investments.