Prata Ginja, R.C.S.; (2011) Essays in private and public investments in human capital. Doctoral thesis , UCL (University College London).

Abstract

This thesis comprises three chapters on the study of investments in human capital. The first chapter analyzes the effects of Head Start, a preschool program for poor children, on adolescents' behaviors. As program is means-tested, its effects are identified using discontinuity in the probability of program participation induced by eligibility rules. Since there is a range of income thresholds, which vary with family size, state and year, the effect is identified for a large set of individuals in the neighborhood of each discontinuity. Participation in Head Start reduces the incidence of behavioral problems, grade repetition, obesity, depression and criminal behavior. Among others, the first chapter leaves two questions unanswered: the first concerns the low take-up of social programs; the second relates to changes in parents' investments in their children when they face income shocks. To first question is addressed in the context of a program launched in Chile in 2002 - the Chile Solidario. The aim of this program is to provide psycho-social support to indigent families. As Head Start, Chile Solidario is a means-tested program and its effects are identified using RD design. The program increases the take-up of subsidies and employment programs. However, information provided by Chile Solidario about other programs increases take-up only among those with less (direct or indirect) previous contact with the welfare system. The last chapter studies the ability of parents to insure investments in their children's human capital against income shocks. Parental investments in children are central to their development over the entire period of childhood. During this period families are potentially hit by a variety of shocks to their resources, which can impact investments in children. Understanding parental reaction is relevant for the design of anti-poverty programs that target vulnerable families with children and it may shed light on the mechanisms behind the effects found for child care programs and income transfers. The approach used builds on a life-cycle model that accounts for within and across periods nonseparability in parents' problem introduced by the accumulation of human capital of children (Cunha, Heckman and Shennach, 2010). I account for the fact that parents have an array of possible investments available. In particular, time maybe a suitable substitute for some types of goods/expenditure investments. I implement my analysis using the Children of the National Longitudinal Survey of the Youth 1979 (CNLSY79). Ignoring the multiplicity of investment that parents have in each moment and the cumulative nature of skills may produce biased estimates. I reject the hypothesis that time use and consumption towards children are separable over time; time use is complement to child's expenditures when children are less than six (for children of worse off families), but it is substitute of expenditures for school-age children.

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