Interpreting the Evidence on Life Cycle Skill Formation

By Flávio Cunha, James J. Heckman, Lance Lochner, Dimitriy V. Masterov. Social Science Research Network, 2005

1,989 citations recorded by the source corpus.

This paper presents economic models of child development that capture the essence of recent findings from the empirical literature on skill formation. The goal of this essay is to provide a theoretical framework for interpreting the evidence from a vast empirical literature, for guiding the next generation of empirical studies, and for formulating policy. Central to our analysis is the concept that childhood has more than one stage. We formalize the concepts of self-productivity and complementarity of human capital investments and use them to explain the evidence on skill formation. Together, they explain why skill begets skill through a multiplier process. Skill formation is a life cycle process. It starts in the womb and goes on throughout life. Families play a role in this process that is far more important than the role of schools. There are multiple skills and multiple abilities that are important for adult success. Abilities are both inherited and created, and the traditional debate about nature versus nurture is scientifically obsolete. Human capital investment exhibits both self-productivity and complementarity. Skill attainment at one stage of the life cycle raises skill attainment at later stages of the life cycle (self-productivity). Early investment facilitates the productivity of later investment (complementarity). Early investments are not productive if they are not followed up by later investments (another aspect of complementarity). This complementarity explains why there is no equity-efficiency trade-off for early investment. The returns to investing early in the life cycle are high. Remediation of inadequate early investments is difficult and very costly as a consequence of both self-productivity and complementarity.

Subfields: Education, Safety Research, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/77f385ee11251d4a91818ca4103eb13585ac271f

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Citations in the corpus

Optimal Taxation and Human Capital Policies over the Life Cycle (2014, positive): “The structural branch of the literature (Cunha et al. 2006; Cunha and Heckman 2007) emphasizes that human capital acquisition occurs throughout life, underscoring the need for a life cycle model.”
The effect of compulsory schooling on health—evidence from biomarkers (2009, positive): “For instance, a recent strand of the human capital literature has stressed the importance of early childhood education for the development of cognitive and non-cognitive skills (Cunha et al. 2006).”
The Labor Market Returns to Cognitive and Noncognitive Ability: Evidence from the Swedish Enlistment (2011, background): “Previous research (e.g. Cunha et al. (2006), Cunha and Heckman (2007)) have suggested that noncognitive abilities can be substantially a¤ected by early interventions.”
A Theory of Intergenerational Mobility (2018, positive): “As in Cunha et al. (2006), parental investments are efficient in the absence of credit constraints but child income does depend on parental human capital.”
The Economics of Human Development and Social Mobility (2014, positive): “The output of child quality from family investment is a scalar measure 1This paper draws on, updates, and substantially extends two previous papers by Cunha et al. (2006) and Cunha and Heckman (2007).”