Working paper number:13-02
Paper Abstract:Most empirical investigations of the effects of cognitive skills assume that they are produced by schooling, and that schooling is exogenous. Drawing on a rich longitudinal data set to estimate production functions for adult reading-comprehension cognitive skills and adult nonverbal cognitive skills, we find that (1) Schooling attainment has a significant and substantial effect on adult reading-comprehension cognitive skills but not on adult nonverbal cognitive skills; and (2) Pre-schooling and post-schooling experiences have substantial positive significant effects on adult cognitive skills. Pre-schooling experiences that increase height for age at age six years substantially and significantly increase adult reading-comprehension and nonverbal cognitive skills, even after controlling for schooling attainment and post-school skilled job tenure. Post-schooling tenure in skilled jobs also has a significant positive effect on adult reading-comprehension and nonverbal cognitive skills, although the latter estimate is sensitive to how we treat gender. Age also has significant positive effect but with diminishing returns on adult reading-comprehension cognitive skills. The findings (1) reinforce the importance of early life investments; (2) support the importance of childhood nutrition (“Flynn effect”) and work complexity in explaining increases in cognitive skills; (3) question interpretations of studies reporting productivity impacts of cognitive skills without controlling for endogeneity; and (4) point to limitations in using adult schooling alone to represent human capital.