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Child Skill Production: Accounting for Parental and Market-Based Time and Goods Investments

Author

Listed:
  • Elizabeth Caucutt
  • Lance Lochner
  • Joseph Mullins
  • Youngmin Park

Abstract

Families invest time, home goods/services, and market-based childcare in their children. We study these investments, focusing on the role of parental human capital and the substitutability of inputs in skill production. We develop a relative demand estimation strategy that uses intratemporal optimality to estimate the substitutability and relative productivity of inputs. We show how relative demand restrictions simplify and improve estimation of the dynamics of skill production. We estimate the skill production technology for American children aged 5–12, finding moderately strong complementarity between inputs and little difference in the technology by parental education. Counterfactual simulations show that estimated input complementarity has important implications for policies that subsidize inputs or provide free childcare.

Suggested Citation

  • Elizabeth Caucutt & Lance Lochner & Joseph Mullins & Youngmin Park, 2026. "Child Skill Production: Accounting for Parental and Market-Based Time and Goods Investments," Journal of Political Economy, University of Chicago Press, vol. 134(1), pages 150-209.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/738480
    DOI: 10.1086/738480
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    Cited by:

    1. Jorge Luis García & James J. Heckman, 2023. "Parenting Promotes Social Mobility Within and Across Generations," Annual Review of Economics, Annual Reviews, vol. 15(1), pages 349-388, September.
    2. Nicola Fuchs-Schündeln & Dirk Krueger & André Kurmann & Etienne Lalé & Alexander Ludwig & Irina Popova, 2023. "The Fiscal and Welfare Effects of Policy Responses to the Covid-19 School Closures," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(1), pages 35-98, March.
    3. Nicola Fuchs-Schünde & Dirk Krueger & Alexander Ludwig & Irina Popova, 2022. "The Long-Term Distributional and Welfare Effects of Covid-19 School Closures," The Economic Journal, Royal Economic Society, vol. 132(645), pages 1647-1683.
    4. Iacopo Morchio, 2022. "Policies for Early Childhood Skills Formation: Accounting for Parental Choices and Noncognitive Skills," Bristol Economics Discussion Papers 22/755, School of Economics, University of Bristol, UK.
    5. Dirk Krueger & Alexander Ludwig & Irina Popova, 2024. "Shaping Inequality and Intergenerational Persistence of Poverty: Free College or Better Schools," NBER Working Papers 32467, National Bureau of Economic Research, Inc.
    6. Richard Gearhart & Lyudmyla Sonchak-Ardan & Raphael Thibault, 2023. "The impact of minimum wage on parental time allocation to children: evidence from the American Time Use Survey," Review of Economics of the Household, Springer, vol. 21(3), pages 1019-1042, September.
    7. Uta Bolt & Eric French & Jamie Hentall Maccuish & Cormac O’Dea, 2018. "Intergenerational Altruism and Transfers of Time and Money: A Life-cycle Perspective," Working Papers wp379, University of Michigan, Michigan Retirement Research Center.
    8. Sen Coskun & Husnu Dalgic & Yasemin Ozdemir, 2025. "Navigating Motherhood: Endogenous Penalties and Career Choice," CRC TR 224 Discussion Paper Series crctr224_2025_722, University of Bonn and University of Mannheim, Germany.
    9. Taryn W. Morrissey, 2023. "The minimum wage and parent time use," Review of Economics of the Household, Springer, vol. 21(3), pages 1043-1062, September.
    10. Hélène Le Forner, 2021. "Formation of Children’s Cognitive and Socio-Emotional Skills: Is All Parental Time Equal?," AMSE Working Papers 2117, Aix-Marseille School of Economics, France.
    11. Wright, Jacob & Zheng, Angela, 2024. "From Preschool to College: The Impact of Education Policies over the Lifecycle," IZA Discussion Papers 17301, Institute of Labor Economics (IZA).
    12. Jacob Wright & Angela Zheng, 2024. "From Preschool to College: The Impact of Education Policies over the Lifecycle," Department of Economics Working Papers 2024-07, McMaster University.
    13. Jacob Bastian & Lance Lochner, 2022. "The Earned Income Tax Credit and Maternal Time Use: More Time Working and Less Time with Kids?," Journal of Labor Economics, University of Chicago Press, vol. 40(3), pages 573-611.
    14. Youngsoo Jang & Minchul Yum, 2024. "Aggregate and Intergenerational Implications of School Closures: A Quantitative Assessment," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(3), pages 90-130, July.
    15. Jacob Bastian & Lance Lochner, 2020. "The EITC and Maternal Time Use: More Time Working and Less Time with Kids?," NBER Working Papers 27717, National Bureau of Economic Research, Inc.
    16. Krueger, Dirk & Ludwig, Alexander & Popova, Irina, 2025. "Shaping inequality and intergenerational persistence of poverty: Free college or better schools?," Journal of Monetary Economics, Elsevier, vol. 150(C).
    17. Francesco Agostinelli & Domenico Ferraro & Xincheng Qiu & Giuseppe Sorrenti, 2024. "Intra-Household Insurance and the Intergenerational Transmission of Income Risk," Working Papers 2024-002, Human Capital and Economic Opportunity Working Group.
    18. Dirk Krueger & Alexander Ludwig & Irina Popova, 2024. "Shaping Inequality and Intergenerational Persistence of Poverty: Free College or Better Schools," PIER Working Paper Archive 24-023, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    19. Minchul Yum, 2023. "Parental Time Investment And Intergenerational Mobility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 187-223, February.
    20. Konstantin Kunze, 2022. "Public Health Insurance of Children and Parental Labor Market Outcomes," Working Papers 349, University of California, Davis, Department of Economics.
    21. Joseph Mullins, 2022. "Designing Cash Transfers in the Presence of Children's Human Capital Formation," Working Papers 2022-019, Human Capital and Economic Opportunity Working Group.
    22. Taryn W. Morrissey, 2023. "The Earned Income Tax Credit and Short-Term Changes in Parents’ Time Investments in Children," Journal of Family and Economic Issues, Springer, vol. 44(2), pages 412-433, June.
    23. Costas Meghir & Orazio Attanasio & Sarah Cattan, 2022. "Early Childhood Development, Human Capital, and Poverty," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 853-892, August.
    24. John A. List, 2026. "The Economics of Scaling Early Childhood Programs: Lessons from the Chicago School," Journal of Political Economy, University of Chicago Press, vol. 134(1), pages 1-48.
    25. Sarah Flood & Joel McMurry & Aaron Sojourner & Matthew Wiswall, 2022. "Inequality in Early Care Experienced by US Children," Journal of Economic Perspectives, American Economic Association, vol. 36(2), pages 199-222, Spring.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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