Essays on Human Capital Development
Date of Award
Spring 2024
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
Economics
First Advisor
Attanasio, Orazio
Abstract
Human capital development in the early years has a long-lasting impact on lifetime outcomes and exhibits substantial inequality from an early age. Understanding the determinants of this process is crucial for policy interventions aimed at mitigating inequality in human capital. This dissertation explores the roles of various environmental factors, including those from neighborhoods, schools, and homes, as well as genetic factors, in the development process. The first chapter addresses the question of how social capital affects child development. I formalize the concept of social capital and quantify it using a novel neighborhood survey from the Project on Human Development in Chicago Neighborhoods. Social capital is defined as the ability of a community to achieve shared objectives, specifically working together for the well-being of children. The indicators I use reflect neighborhood connectedness and neighbors' engagement in supporting and monitoring children. The hypothesis is that a more connected and engaged neighborhood can act as a safeguard, reducing the risk of children deviating from expected developmental paths. Identifying the causal impacts of social capital on child development is challenging. This is because parents’ neighborhood decisions can be correlated to unobserved factors in the development process. I use an instrumental variable approach to address the endogeneity issue. I leverage a natural experiment resulting from public housing demolition in Chicago and focus on children whose houses were not demolished but close to the demolished ones. In particular, I exploit both the occurrence and the timing of demolition across neighborhoods to generate plausibly exogenous variations in social capital due to disrupted social ties. To compare the role of social capital to that of parental investments, I estimate a dynamic human capital production function that incorporates both inputs: social capital and parental investments. I adapt the latent factor model of Cunha et al. (2010). To identify the impacts of parental investments, I use household resources and female labor market shocks as instruments, which reflect the impacts of budget constraints on investments. I find that social capital is important for both cognitive skills and socio-emotional skills for children between 6 and 15 years old. Specifically, a one standard deviation increase in social capital improves cognitive skills and socio-emotional skills by 0.16 and 0.19 standard deviations, respectively. Conversely, parental investments are effective in developing cognitive skills, with an effect size of a 0.4 standard deviation increase. Counterfactual experiments suggest that by equating the social capital level in low socioeconomic status (SES) neighborhoods to that in high SES neighborhoods, we can reduce the skill gap between high and low SES children by 25% for cognitive skills and 80% for socio-emotional skills. Initiatives aimed at building social capital in disadvantaged communities could be vital in reducing inequality. In the second chapter, we examine how parental investments, school quality, genetics, and their interactions influence child development. Specifically, we estimate the skill production functions for both cognitive and socio-emotional skills. We implement an instrumental variable approach and leverage information from school application portfolios to address the potential endogeneity of parental investments and school quality. We use polygenic scores to capture an individual’s genetic propensity for educational attainment. Using data from the Millennium Cohort Study in the UK, we find distinct patterns for cognitive skills and socio-emotional skills. Cognitive skills at age 7 are significantly influenced by parental investments, school quality, genetics, and lagged skills at age 5. Notably, school quality and polygenic scores are substitutes, indicating that better schools can mitigate skill disparities related to genetic predisposition for educational attainment. In contrast, socio-emotional skills at this stage are predominantly affected by previous skills and are less sensitive to investments.
Recommended Citation
Ye, Qianyao, "Essays on Human Capital Development" (2024). Yale Graduate School of Arts and Sciences Dissertations. 1279.
https://elischolar.library.yale.edu/gsas_dissertations/1279
