TY  - GEN
TI  - Interpreting the evidence on life cycle skill formation
SN  - 1350-6722
Y1  - 2005/04//
T3  - Discussion Papers in Economics
PB  - Department of Economics, University College London
KW  - JEL classification: J31
KW  -  I21
KW  -  I22
KW  -  I28. Skill formation
KW  -  education
KW  -  government policy
KW  -  educational finance
ID  - discovery2559
CY  - London, UK
A1  - Cunha, F.
A1  - Heckman, J.J.
A1  - Lochner, L.
A1  - Masterov, D.V.
UR  - http://www.ucl.ac.uk/silva/economics/research/papers/working-papers-2005
AV  - public
N2  - 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 scientiÞcally 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.
ER  -