April 2024

IZA DP No. 16956: Public and Parental Investments, and Children's Skill Formation

Miriam Gensowski, Rasmus Landerso, Philip Dale, Anders Hojen, Laura Justice, Dorthe Bleses

This paper studies the interaction between parental and public inputs in children's skill formation. We perform a longer-run follow-up study of a randomized controlled trial that increased preschool quality and initially improved skills significantly for children of all backgrounds. There is, however, complete fade-out for children with highly educated parents. Given positive long-run effects for children with low-educated parents, the treatment reduces child skill gaps across parents' education by 46%. We show that 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.