Multidimensional human capital formation in a developing country: Health, cognition and locus of control in the Philippines

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Abstract

Economic success depends on multiple human capital stocks whose production is interrelated and occurs over many life stages. Yet, much empirical work fails to account for human capital's multidimensional nature and limits its focus to specific childhood stages. Using longitudinal data from the Philippines, I estimate a model of multidimensional human capital formation from birth through adulthood where health, cognitive, and noncognitive dimensions are jointly produced. I examine during which developmental stages parental investment is most influential and address the endogeneity of investment using a policy function where investment depends on child characteristics, exogenous conditions at birth and local prices. Findings imply that not only will early human capital disparities persist into adulthood without early remediation but also that cognitive gains yielded from early remediation will be lost without complementary investment in adolescence. Findings further suggest that interventions will be undervalued if their multidimensional effects are not accounted for.

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