Human Capital

The Process of Human Capital Accumulation

I am very interested in understanding the process of human development, starting in the early years.

Parental investment plays and important role and I try to understand the drivers of parental behaviour.

Below I list some of the projects that I am working on.


– Estimating the Production Function for Human Capital: Results from a Randomized Control Trial in Colombia .

with S. Cattan, E. Fitzsimons, C. Meghir and M. Rubio-Codina (May 2017, NBER WP No.20965) .  New draft!

Abstract: We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The effects of the program can be explained by increases in parental investments, which have strong effects on outcomes and are complementary to both maternal skills and child’s baseline skills. 
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Human Capital Development and Parental Investment in India

with Costas Meghir and Emily Nix (June 2015, NBER WP No.21740)

Abstract: We study human development from the early years to adolescence by embedding a structural model within a measurement system for factor models. Our theoretical framework extends in several dimensions the approach taken by Cunha et al (2010). We use flexible functional form assumptions for the distribution of factors and use an instrumental variable approach to take into account the endogeneity of investment. Using data from three waves of two cohorts of Indian Children from the Young Lives Survey, we estimate the production function for two dimensions of human capital: cognition and health. The richness of the data and the fact that they cover children from the age of 1 until the age of 15 allows us to cover a very long and important interval, which has previously not been investigated in this fashion. We uncover important complementarities, so that the non-linearity of the production function is important. We also show that it is important to take into account the endogeneity of investment.
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Human capital growth and poverty: Evidence from Ethiopia and Peru

with Costas Meghir, Emily Nix, and Francesca Salvati (Review of Economic Dynamics, Vol. 25, April 2017, pp234-259)

Abstract: In this paper we use high quality data from two developing countries, Ethiopia and Peru, to estimate the production functions of human capital from age 1 to age 15. We characterize the nature of persistence and dynamic complementarities between two components of human capital: health and cognition. We also explore the implications of different functional form assumptions for the production functions. We find that more able and higher income parents invest more, particularly at younger ages when investments have the greatest impacts. These differences in investments by parental income lead to large gaps in inequality by age 8 that persist through age 15.
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The Dynamics of Human Development in the very early years.

with Raquel Bernal, Michele Giannola and Milagro Nores

 

Abstract: This paper uses the data on child development collected around the evaluation of a nursery program to estimate the details of the process of human development. We model development as made of three latent factors, reflecting health and cognitive and socio emotional skills. We observe children from age 1 to age 6. We assume that, at each age, these three factors interact among themselves and with a variety of other inputs to determine the level of development at following ages. Relative to other studies, the richness of the data we use allows us to: (i) let the dynamics be rich and flexible; (ii) each factors can play a role in the production of any other factor; (iii) the function changes with age; (iv) parental investment is treated as endogenous. We find that the dynamics of the process can be reacher than usually assumed , which has important implications for the degree of persistence of different inputs in time. Persistence also changes with age. The endogeneity of investment is also important.   
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– Parental Beliefs and Investments in Human Capital

with Flavio Cunha and Pamela Jervis (available soon)

Abstract: We shed light on the importance of parental subjective beliefs in explaining the heterogeneity in parental choices of investments in the development of their children. Subjective beliefs about the production function of skills in early childhood development is crucial since parents may have biased beliefs about the returns to investments, which is crucial to pin down in designing policies aimed at remediating poor investments. To determinate the importance of parental subjective beliefs, we first show how to convert the answers to a specific set of questions into estimates of expected rates of returns on specific investment and then relate these estimates to actual parental behavior, then we formulate and estimate a model in which parents have subjective beliefs about the technology governing the formulation of skill in early childhood development, drawing on detailed and unique data for the identification other model from an early childhood intervention ran in Colombia, in which, home visitors paid weekly visits to randomly chosen households with the aim of promoting child cognitive and psychosocial development and improving mother-child interactions. The intervention targeted poor households with children aged 12 to 24 months at baseline and lasted 18 months.
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– Parental Beliefs about Returns to Investments in School Children

with Teodora Boneva and Christopher Rauh

Abstract: In this paper, we study parental beliefs about the returns to different types of investments in school children. Using a representative sample of 1,962 parents in England, we document how parents perceive the returns to parental time investments, material investments and school quality, as well as the complementarity/substitutability between the different inputs. Both parental investments and school quality are perceived to be important and returns are perceived to be diminishing with higher investments. We further find that parental material investments are perceived as more productive if the child attends a high quality school. We find no differences in perceived returns to investments by initial human capital or gender of the child. We document a high degree of heterogeneity in perceived returns across respondents and document that perceived returns are highly correlated with actual investment decisions made by parents.
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This project is funded by the Nuffield Foundation

 

–  Inferring beliefs about the production function of human capital

with Sarah Cattan