Human Capital Policy

127 Pages Posted: 26 Feb 2003 Last revised: 12 Dec 2022

See all articles by Pedro Manuel Carneiro

Pedro Manuel Carneiro

University College London - Department of Economics; IZA Institute of Labor Economics

James J. Heckman

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: February 2003

Abstract

This paper considers alternative policies for promoting skill formation that are targetted to different stages of the life cycle. We demonstrate the importance of both cognitive and noncognitive skills that are formed early in the life cycle in accounting for racial, ethnic and family background gaps in schooling and other dimensions of socioeconomic success. Most of the gaps in college attendance and delay are determined by early family factors. Children from better families and with high ability earn higher returns to schooling. We find only a limited role for tuition policy or family income supplements in eliminating schooling and college attendance gaps. At most 8% of American youth are credit constrained in the traditional usage of that term. The evidence points to a high return to early interventions and a low return to remedial or compensatory interventions later in the life cycle. Skill and ability beget future skill and ability. At current levels of funding, traditional policies like tuition subsidies, improvements in school quality, job training and tax rebates are unlikely to be effective in closing gaps.

Suggested Citation

Carneiro, Pedro Manuel and Heckman, James J., Human Capital Policy (February 2003). NBER Working Paper No. w9495, Available at SSRN: https://ssrn.com/abstract=380480

Pedro Manuel Carneiro

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

IZA Institute of Labor Economics

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Germany

James J. Heckman (Contact Author)

University of Chicago - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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American Bar Foundation

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Institute for the Study of Labor (IZA)

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Germany

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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