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Estimating the Technology of Children’s Skill Formation

Author

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  • Francesco Agostinelli
  • Matthew Wiswall

Abstract

In this paper, we study the process of children’s skill formation using a dynamic latent factor model to identify key features of the skill production function. We develop and estimate a joint dynamic process for latent investment and skill development, incorporating both static and dynamic complementarities between parental investments and children’s skills in the technology of skill formation. Our analysis of US data reveals that early childhood investments (age 5–6) are highly effective for cognitive skill development, with greater marginal productivity for children with lower existing skills. This suggests that targeting interventions at disadvantaged young children is most beneficial.

Suggested Citation

  • Francesco Agostinelli & Matthew Wiswall, 2025. "Estimating the Technology of Children’s Skill Formation," Journal of Political Economy, University of Chicago Press, vol. 133(3), pages 846-887.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/733396
    DOI: 10.1086/733396
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    Citations

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    Cited by:

    1. James Heckman & Haihan Tian & Zijian Zhang & Jin Zhou, 2025. "Dynamic Complementarity," RFBerlin Discussion Paper Series 2595, ROCKWOOL Foundation Berlin (RFBerlin).
    2. Francesco Agostinelli & Morteza Saharkhiz & Matthew Wiswall, 2025. "Home and School in the Development of Children," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 66(2), pages 527-566, May.
    3. Orazio Attanasio & V’ctor Sancibri‡n & Federica Ambrosio, 2025. "New Measures for Richer Theories: Some Thoughts and an Example," Cowles Foundation Discussion Papers 2477, Cowles Foundation for Research in Economics, Yale University.
    4. Antonia Antweiler & Joachim Freyberger, 2025. "Flexible estimation of skill formation models," Papers 2507.18995, arXiv.org.
    5. Samuel Berlinski & Michele Giannola & Alessandro Toppeta, 2026. "Effective Families or Effective Schools? Experimental Evidence on Fostering Children's Numeracy," CESifo Working Paper Series 12563, CESifo.
    6. Dan Anderberg & Gloria Moroni & Alexander Vickery, 2025. "Intimate partner violence and children's human capital," IFS Working Papers W25/52, Institute for Fiscal Studies.
    7. Dan Anderberg & Gloria Moroni & Alexander Vickery, 2025. "Intimate Partner Violence and Children's Human Capital," CESifo Working Paper Series 12239, CESifo.
    8. Cecilia S. Diaz-Campo, M. Antonella Mancino, Salvador Navarro, 2025. "A Dynamic Factor Model of Skill Formation and Mental Health: Counterfactual Analysis of Interventions for Social Mobility," LCERPA Working Papers jc0160, Laurier Centre for Economic Research and Policy Analysis, revised Aug 2025.
    9. Yue, Ai & Zhang, Xinyue & Gao, Yuan & Song, Qiannan & Gong, Hao & Peng, Yuqing & Shi, Yaojiang, 2025. "The impact of caregiver mental health on child development in rural China: The role of parenting practices and educational investments," Economic Modelling, Elsevier, vol. 152(C).
    10. Alessandra Cassar & Alejandrina Cristia & Pauline Grosjean & Sarah Walker, 2026. "It makes a village: child care and prosociality," Journal of Economic Growth, Springer, vol. 31(1), pages 41-76, March.
    11. Dong Yang, 2025. ""Don't Fall Behind": A Unified Framework of Dynastic Survival, Two-Stage Belief Error, and the Modern Involution Trap," Papers 2511.19017, arXiv.org.
    12. Samuel Berlinski & Michele Giannola & Alessandro Toppeta, 2026. "Effective Families or Effective Schools? Experimental Evidence on Fostering Children's Numeracy," CESifo Working Paper Series 12563, CESifo.

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