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Child Development and Public Policies

Paper Session

Saturday, Jan. 4, 2020 2:30 PM - 4:30 PM (PDT)

Marriott Marquis, Rancho Santa Fe 2
Hosted By: American Economic Association
  • Chair: Francesco Agostinelli, University of Pennsylvania

Actors in the Child Development Process

Daniela Del Boca
,
University of Torino
Christopher Flinn
,
New York University
Ewout Verriest
,
Penn State University
Matthew Wiswall
,
University of Wisconsin-Madison

Abstract

We construct and estimate a model of child development in which both the parents and children make investments in the child's skill development. In each period of the development process, partially altruistic parents act as the Stackelberg leader and the child the follower when setting her own study time. We then extend this non-cooperative form of interaction by allowing parents to offer incentives to the child to increase her study time, at some monitoring cost. We show that this incentive scheme, a kind of internal conditional cash transfer, produces efficient outcomes and, in general, increases the child's cognitive ability. In addition to heterogeneity in resources (wage offers and non-labor income), the model allows for heterogeneity in preferences both for parents and children, and in monitoring costs. Like their parents, children are forward-looking, but we allow children and parents to have different preferences and for children to have age-varying discount rates, becoming more “patient” as they age. Using detailed time diary information on the allocation of parent and child time linked to measures of child cognitive ability, we estimate several versions of the model. Using model estimates, we explore the impact of various government income transfer policies on child development. As in Del Boca et al. (2016), we find that the most effective set of policies are (external) conditional cash transfers, in which the household receives an income transfer given that the child's cognitive ability exceeds a prespecified threshold. We find that the possibility of households using internal conditional cash transfers greatly increases the cost effectiveness of external conditional cash transfer policies.

Money Versus Time: Family Income, Maternal Labor Supply, and Child Development

Francesco Agostinelli
,
University of Pennsylvania
Giuseppe Sorrenti
,
University of Zurich

Abstract

We study the effect of family income and maternal hours worked on child development. Our instrumental variable analysis suggests different results for cognitive and behavioral development. An additional $1,000 in family income improves cognitive development by 4.4 percent of a standard deviation but has no effect on behavioral development. A yearly increase of 100 work hours negatively affects both outcomes by approximately 6 percent of a standard deviation. The quality of parental investment matters and the substitution effect (less parental time) dominates the income effect (higher earnings) when the after-tax hourly wage is below $13.50. Results call for consideration of child care and minimum wage policies that foster both maternal employment and child development.

Understanding the Effects of Workfare Policies on Child Human Capital

Jorge Rodriguez
,
Universidad de los Andes, Chile

Abstract

Workfare policies induce people to work more and thus increase their economic self-sufficiency. However, as parents spend less time at home, workfare policies might have negative effects on children's development. I study the mechanisms by which workfare policies affect children by exploiting experimental evidence from “New Hope” (Milwaukee, 1994-1997). The program randomly assigned an earnings subsidy—similar to the EITC—and a child care subsidy subject to a full-time work requirement to a group of economically disadvantaged families. For families with children who were in their preschool years while they were exposed to New Hope, I find that the program increased labor supply, family income, and center-based child care use during the eligibility period. Notably, the program had sizable short-term effects on child academic performance. Counterfactual experiments from a dynamic-discrete choice model indicate that most of the effect of workfare policies on child human capital is explained because parents, induced by the pro-work incentives embedded in New Hope, enrolled their children in center-based child care

'Prep School for Poor Kids': The Long-Run Impact of Head Start on Human Capital and Productivity

Martha Bailey
,
University of Michigan
Shuqiao Sun
,
University of Michigan
Brenden Timpe
,
University of Michigan

Abstract

This paper evaluates the long-run effects of Head Start using large-scale, restricted 2000-2013 Census-ACS data linked to date and place of birth in the SSA’s Numident file. Using the county-level rollout of Head Start between 1965 and 1980 and state age-eligibility cutoffs for school entry, we find that participation in Head Start is associated with increases in adult human capital and economic self-sufficiency, including a 0.29-year increase in schooling, a 2.1-percent increase in high-school completion, an 8.7-percent increase in college enrollment, and a 19-percent increase in college completion. These estimates imply sizable, long-term returns to investing in large-scale preschool programs.
Discussant(s)
Matthew Wiswall
,
University of Wisconsin-Madison
Katrine Loken
,
Norwegian School of Economics
Jeffrey Grogger
,
University of Chicago
John Eric Humphries
,
Yale University
JEL Classifications
  • I3 - Welfare, Well-Being, and Poverty
  • H3 - Fiscal Policies and Behavior of Economic Agents