Public and Parental Investments, and Children’s Skill Formation

Abstract

This paper studies the interaction between parental and public inputs in children’s skill formation based on a longer-run follow-up of a randomized controlled trial. While the RCT initially increased preschool quality and initially improved skills significantly for children of all backgrounds, there is complete fade-out for children with highly educated parents, and only positive long-run effects for children with low-educated parents. The heterogeneous treatment effects are a result of differences in parents’ responses in terms of investments, reacting to school quality later in childhood. There is also evidence of cross-productivity between reading and math skills and socio-emotional development.