The Economics of Human Development and Social Mobility

Abstract

This paper distills and extends recent research on the economics of human development and social mobility. It summarizes the evidence from diverse literatures on the importance of early life conditions in shaping multiple life skills and the evidence on critical and sensitive investment periods for shaping different skills. It presents economic models that rationalize the evidence and unify the treatment effect and family influence literatures. The evidence on the empirical and policy importance of credit constraints in forming skills is examined. There is little support for the claim that untargeted income transfer policies to poor families significantly boost child outcomes. Mentoring, parenting, and attachment are essential features of successful families and interventions to shape skills at all stages of childhood. The next wave of family studies will better capture the active role of the emerging autonomous child in learning and responding to the actions of parents, mentors and teachers.

Keywords: attachment; capacities; credit constraints; dynamic complementarity; parenting; scaffolding.

Figure 1

The Probability and Returns of College Enrollment by Endowments Levels Source: Eisenhauer et al. (2013) Note: College enrollment refers to the individuals who enroll in college immediately after having finished high school. Returns are expressed in units of millions of dollars. Higher deciles correspond to higher levels. See Eisenhauer et al. (2013) for greater details.