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. 2010 May 1;78(3):883-931.
doi: 10.3982/ECTA6551.

Estimating the Technology of Cognitive and Noncognitive Skill Formation

Flavio Cunha  1 , James Heckman, Susanne Schennach
Affiliations

Estimating the Technology of Cognitive and Noncognitive Skill Formation

Flavio Cunha et al. Econometrica. .

Abstract

This paper formulates and estimates multistage production functions for child cognitive and noncognitive skills. Output is determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of nonlinear factor models. A by-product of our approach is a framework for evaluating childhood interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle for the production of cognitive skills. It increases in later stages of the life cycle for the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For some configurations of disadvantage and outcomes, it is optimal to invest relatively more in the later stages of childhood.

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Figures

Figure 1
Figure 1
Ratio of early to late investment in human capital as a function of the ratio of first period to second period investment productivity for different values of the complementarity parameter
Figure 2
Figure 2
Percentage Increase in Total Investments as a Function of Child Initial Conditions of Cognitive and Noncognitive Skills
Figure 3
Figure 3
Percentage Increase in Total Investments as a Function of Maternal Cognitive and Noncognitive Skills
Figure 4
Figure 4
Optimal Early (Left) and Late (Right) Investments by Child Initial Conditions of Cognitive and Noncognitive Skills Maximizing Aggregate Education
Figure 5
Figure 5
Optimal Early (Left) and Late (Right) Investments by Maternal Cognitive and Noncognitive Skills Maximizing Aggregate Education
Figure 6
Figure 6
Ratio of Early to Late Investments by Child Initial Conditions of Cognitive and Noncognitive Skills Maximizing Aggregate Education (Left) and Minimizing Aggregate Crime (Right)
Figure 7
Figure 7
Ratio of Early to Late Investments by Maternal Cognitive and Noncognitive Skills Maximizing Aggregate Education (Left) and Minimizing Aggregate Crime (Right)
Figure 8
Figure 8
Densities of Ratio of Early to Late Investments Maximizing Aggregate Education versus Minimizing Aggregate Crime
Figure 9
Figure 9
Optimal Early Investments by Child Initial Cognitive Skills and Maternal Cognitive Skills Model with Cognitive Skill Only (Left) and the Model with Cognitive and Noncognitive Skills (Right)
Figure 10
Figure 10
Optimal Late Investments by Child Initial Cognitive Skills and Maternal Cognitive Skills Model with Cognitive Skill Only (Left) and the Model with Cognitive and Noncognitive Skills (Right)
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