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The Economics & Psychology of Inequality and Human Development


  • Flavio Cunha

    (University of Pennsylvania)

  • James J. Heckman

    (University of Chicago & University College Dublin)


Recent research on the economics of human development deepens under- standing of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequal- ities in family environments and investments in children are substantial. They causally a ect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for di erent out- comes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies di er depending on target outcomes of interest and on the nature of adversity in a child's early years. For some con gurations of early disadvantage and for some desired outcomes, it is ecient to invest relatively more in the later years of childhood than in the early years.

Suggested Citation

  • Flavio Cunha & James J. Heckman, 2009. "The Economics & Psychology of Inequality and Human Development," Working Papers 200905, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:200905

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    References listed on IDEAS

    1. Arnaud Chevalier & Colm Harmon & Vincent O’ Sullivan & Ian Walker, 2013. "The impact of parental income and education on the schooling of their children," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-22, December.
    2. Erik Plug & Wim Vijverberg, 2003. "Schooling, Family Background, and Adoption: Is It Nature or Is It Nurture?," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 611-641, June.
    3. Paul Gregg & Elizabeth Washbrook, 2003. "The Effects of Early Maternal Employment on Child Development in the UK," The Centre for Market and Public Organisation 03/070, Department of Economics, University of Bristol, UK.
    4. Libertad González Luna, 2005. "The determinants of the prevalence of single mothers: A cross-country analysis," Economics Working Papers 876, Department of Economics and Business, Universitat Pompeu Fabra.
    5. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
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    More about this item


    inequality; capabilities; noncognitive traits; human development; technology of capability formation; policy targeting;

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