Working Paper: NBER ID: w31199
Authors: Robert Kaestner; Luis F. Faundez
Abstract: This article describes a conceptual and empirical approach for estimating a human capital production function of child development that incorporates mother- or child-fixed effects. The use of mother- or child-fixed effects is common in this applied economics literature, but its application is often inconsistent with human capital theory. We outline the problem and demonstrate its empirical importance with an analysis of the effect of Head Start and preschool on child and adult outcomes. The empirical specification we develop has broad implications for a variety of applied microeconomic analyses beyond our specific application Results of our analysis indicate that attending Head Start or preschool had no economically or statistically significant effect on child or adult outcomes.
Keywords: human capital; child development; head start; fixed effects; production function
JEL Codes: J13; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Head Start attendance (I21) | Child development outcomes (J13) |
| Misspecified models (C52) | Biased estimates of productivity of investments (J24) |
| Sibling comparisons (J12) | Inconsistent results in previous studies (C91) |
| Dynamic effects and depreciation of cognitive skills (J24) | Different returns on investments by age (J26) |
| Head Start effectiveness (I21) | Conventional wisdom (D80) |