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Estimating the Technology of Cognitive and Noncognitive Skill Formation

Flavio Cunha, James Heckman and Susanne Schennach

No 15664, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper formulates and estimates multistage production functions for children's cognitive and noncognitive skills. Skills are 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 production technologies based on nonlinear factor models with endogenous inputs. A by-product of our approach is a framework for evaluating childhood and schooling interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of the same bundle 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 in the production of cognitive skills. It is roughly constant across stages of the life cycle in the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For most configurations of disadvantage, our estimates imply that it is optimal to invest relatively more in the early stages of childhood than in later stages.

JEL-codes: C31 J13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm, nep-hrm, nep-lab and nep-ltv
Date: 2010-02
Note: CH ED
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Published as Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, 05.

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Related works:
Journal Article: Estimating the Technology of Cognitive and Noncognitive Skill Formation (2010) Downloads
Working Paper: Estimating the technology of cognitive and noncognitive skill formation (2010) Downloads
Working Paper: Estimating the Technology of Cognitive and Noncognitive Skill Formation (2010) Downloads
Working Paper: Estimating the Technology of Cognitive and Noncognitive Skill Formation (2007) Downloads
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