Early Skill Effects on Parental Beliefs, Investments and Children Long-Run Outcomes¹

Abstract

This paper 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 change parental beliefs and influence 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.