Working Paper: NBER ID: w11032
Authors: James J. Heckman; Dimitriy V. Masterov
Abstract: This paper argues that skill formation is a life-cycle process and develops the implications of this insight for Scottish social policy. Families are major producers of skills, and a successful policy needs to promote effective families and to supplement failing ones. We present evidence that early disadvantages produce severe later disadvantages that are hard to remedy. We also show that cognitive ability is not the only determinant of education, labor market outcomes and pathological behavior like crime. Abilities differ in their malleability over the life-cycle, with noncognitive skills being more malleable at later ages. This has important implications for the design of policy. The gaps in skills and abilities open up early, and schooling merely widens them. Additional university tuition subsidies or improvements in school quality are not warranted by Scottish evidence. Company-sponsored job training yields a higher return for the most able and so this form of investment will exacerbate the gaps it is intended to close. For the same reason, public job training is not likely to help adult workers whose skills are rendered obsolete by skill-biased technological change. Targeted early interventions, however, have proven to be very effective in compensating for the effect of neglect.
Keywords: skill formation; Scottish policy; family dynamics; education; noncognitive skills
JEL Codes: J31; I21; I22; I28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| early disadvantages (B15) | later disadvantages (Y50) |
| family environment (J12) | skill development (J24) |
| dysfunctional families (J12) | impaired children (J14) |
| impaired children (J14) | poor performance in school and society (I24) |
| early advantages in skills (J24) | later advantages (Y50) |
| early disadvantages (B15) | compounding deficits (H62) |
| targeted early interventions (I24) | compensate for neglect (M52) |
| public job training (M53) | adult workers with obsolete skills (J69) |
| educational policies (I28) | skill deficits (J24) |