Success in the modern knowledge economy requires human capital. Economic growth is no longer enough to lift low earning individuals out of poverty. Throughout the developed world, recent periods of increasing output have seen improvements in living standards primarily at the top of the income distribution, whereas changes in the middle and bottom of the distribution have been much more muted or even non-existent. The returns to education have remained high even in the face of large expansions in the supply of skilled workers in the economy, probably because the demand for skilled labor increased even more.
In less developed economies, investments in human capital also continues to command large returns, although these economies that are far from the frontier. At a macro level, human capital accumulation is strongly associated with economic development. Yet, in spite of important increases in years of schooling in the population in the last 50 years, learning outcomes of children in many poor countries remain very low.
Unfortunately, experiencing poverty in childhood hinders one's life chances dramatically, both in rich and poor countries, and a central mechanism through which this occurs is skill formation. There is substantial evidence, from all corners of the world, that socioeconomic gaps in cognitive and noncognitive skills emerge early and persist throughout one's entire life. Deficiencies in human capital accumulation hinder the success of individuals and entire economies, and they are primarily affecting those growing up in poverty.
This project examines the determinants and consequences of skill formation, especially among children in poverty. Our studies encompass developed and developing countries, allowing us to learn from the commonalities that exist across environments, but also from the differences. Effective policy design on the issue of skill formation in policy can only be possible with a solid understanding of the constraints and opportunities faced by poor children and their families.
This is of course a very large area of research. Our project seeks to enhance our understanding in 8 specific dimensions:
1) We study the dynamics of learning in schools, using data primarily from Ecuador. In particular we investigate what is the impact of teachers and peers on learning at different stages of elementary school, how do these impacts interact with each other across grades, and whether training teachers to improve the quality of their interactions with students can produce substantial improvements in learning outcomes. Three other projects examine school grants in Senegal, the provision of private schooling in Pakistan, and teacher labour markets in Chile.
2) We study the role of peers and competition across students, using dat afrom Chile. More specifically, we estimate the impact of peers on learning in Chile, which formulates a model where students play an effort game with their peers, and where rank affects achievement.
3) We investigate the impact of free access to child care on labour supply by family members, home resources, and child development. We ask to what extent free child care provision allows family members (typically parents, but also other extended family members when they live in the same household) with increased opportunities to work, and whether this translates into a boost in home resources, especially among poor families. We also document how access to free child care produced changes in health, cognitve and non-cognitive skills, and decision making quality among children.
4) We examine the formation of parental beliefs about investments in children, by studying particular parenting interventions delivered at low cost in low resource settings. We study programs in the Gambia in Chile, document how they impacted the development of children, and through which mechanisms they are likely to operate.
5) When cash transfers, such as those offered in many poverty alleviation programs, are targeted to different household members, then the bargaining power of different household members may change as a result, as well as the resulting allocation of resources across different uses. Data from a unique government experiment in Macedonia, where for a time period, a particular cash transfer was offered either to husbands or to wives in different (randomly chosen) parts of the country, allow us to study this question in detail.
6) The process of skill formation begins in utero, and there is ample evidence that children in poor countries suffer substantial insults to their development while they are still at this stage of this development, with substantial and long term consequences for their development. We aim to understand how the provision of cash and information about pre and peri-natal practices to pregnant women in extreme poverty can contribute to the development of their children, not only the one in utero, but also potentially his or her siblings, and through what mechanisms such improvements are most likely to occur.
7) Even in high income countries there is a tail of socially excluded households that lives persistently in abject poverty, and alienated from most of society, even from the provision of social services that could be so beneficial to them. Often these households forego many welfare services and benefits for which they are potentially eligible, and which could make dramatic differences in their lives. It is therefore central to understand to what extent one can design policies to improve their take up of these services, on their path to become more included in society. We aim to investigate the role of social workers and of peers and neighbours in fostering the engagement of very poor households with the public sector.
8) The last topic we investigate concerns the study of the impact of the minimum wage, and central and topical issue in poor and rich countries alike. It is important to go beyond understanding the impact of minimum wages on employment and earnings. One also needs to know through which mechanisms such impacts operate, and what are wider impacts on firm behaviours, both in terms of investment, pricing, and other dimensions, which can affect society in many ways.
