Complementarity and Substitutability in the Production of Early Human Capital

29 Pages Posted: 3 Feb 2017 Last revised: 11 Sep 2023

See all articles by Jorge Luis García

Jorge Luis García

Clemson University - John E. Walker Department of Economics; University of Southern California - Schaeffer Center for Health Policy and Economics

Sebastian Gallegos

UAI Business School

Date Written: July 12, 2017

Abstract

This paper uses data from a randomized trial of an early childhood education program to estimate production functions of early-life human capital. We allow the initial stock of human capital to interact with childcare and parental investments in children. Our production functions display dynamic complementarity in childcare and dynamic substitutability in parental investments. Childcare is more productive for children with a higher stock of initial human capital, while parental investment is more beneficial for children with a lower stock. Our findings indicate that policies to remediate socio-economic inequality in early childhood should improve childcare provision and also target parenting practices.

Keywords: Childcare, Early Childhood Education, Dynamic Complementarity, Parental Investment, Production Function of Skills, Randomized Trials

JEL Classification: J13, I20, I24, I28

Suggested Citation

Garcia, Jorge Luis and Gallegos, Sebastian, Complementarity and Substitutability in the Production of Early Human Capital (July 12, 2017). Available at SSRN: https://ssrn.com/abstract=2910167 or http://dx.doi.org/10.2139/ssrn.2910167

Jorge Luis Garcia (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

635 Downey Way
Los Angeles, CA 90089-3333
United States

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