The Development of Health and Human Capital Accumulation

Abstract

Childhood health affects both future health and skill accumulation, giving rise to disparities in human capital. I estimate flexible production functions of health, cognition and socio-emotional skill between 9 months-14 years of age that capture dynamic relationships between past stocks of human capital, parental human capital and household investments. Using multiple measures of inputs and a latent factor structure, I find that health development is highly self-productive and influenced by parental health, but that skills affect its development in late childhood. Health is important for cognitive development at key early and late stages, and excluding it overstates cognition's role in skill accumulation. Simulations show that interventions aimed at improving the health of children or their parents lead to improvements in health and skills at 14.

Keywords: Human capital, child development, dynamic factor analysis, health, cognitive skills, socio-emotional skills

JEL Classification: I12, I14, J13, J24