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Policies for Early Childhood Skills Formation: Accounting for Parental Choices and Noncognitive Skills

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  • Iacopo Morchio

Abstract

What are the returns in terms of children's skills development to child allowance policies? Answering this question requires a theory of the tradeoffs faced by households, as well as a realistic technology of skills formation. I build a model of parental choices which embeds the technology of cognitive and noncognitive skills formation estimated by Cunha et al. (2010), featuring risky investment in children, time use trade-offs, idiosyncratic income risk and borrowing constraints. Accounting for noncognitive skills implies higher effectiveness of parental investments, and therefore higher policy returns than previously estimated in the literature.

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  • Iacopo Morchio, 2022. "Policies for Early Childhood Skills Formation: Accounting for Parental Choices and Noncognitive Skills," Bristol Economics Discussion Papers 22/755, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:22/755
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