Estimating the Production Function for Human Capital: Results from a Randomized Controlled Trial in Colombia

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 parents’ 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, emphasizing the importance of parenting interventions at an early age. (JEL I24, I28, J13, J24, O15)

The Development of Health and Human Capital Accumulation

“…This assumption is commonplace in the economics literature on human capital development. For example, Heckman (2007, 2008); Cunha et al (2010), Attanasio et al (2017Attanasio et al ( , 2020b, Agostinelli and Wiswall (2016a) all make similar assumptions, treating components of human capital aggregates or composites of the many underlying dimensions.…”

“…Cunha et al (2010), Attanasio et al (2020c), and Agostinelli and Wiswall (2016a) include one investment type in their estimations. Attanasio et al (2020b) allows for material and non-material investments in their evaluation of the impact of a Randomized Control Trial (RCT) on the produciton of cognitive and socio-emotional skill. The production function of health over childhood has also been less widely studied than that of cognitive and socio-emotional skill.…”

“…For example, Cunha et al (2010), Attanasio et al (2017Attanasio et al ( , 2020b, and Agostinelli and Wiswall (2016a) all specify similar relationships between investments, child human capital, endowments, and household characteristics. plays active games outdoors with their child or how often they ensure the child has regular meals.…”

“…Over the past two decades, the growing economics literature on human capital development has centered mainly on the understanding how cognitive and socio-emotional skills develop and are determined by household behaviour over childhood (e.g Cunha and Heckman (2008), Cunha et al (2010), Attanasio et al (2020b)). The result has been progress towards formalising and quantifying several important aspects of skill accumulation.…”

“…I also find that excluding aspects of health and the healthy environment from the cognitive production function leads to an overstatement of the self and cross-productivity of skills and the impact of cognitive investments at these key stages. This highlights the importance of allowing for the impact of health in a model of skill development, and implies that studies that have not done so have risked overstating elasticities of skill production (e.g Cunha et al (2010), Agostinelli and Wiswall (2016a), Attanasio et al (2020b)).…”