TY - JOUR AU - Cunha,Flavio AU - Heckman,James AU - Schennach,Susanne TI - Estimating the Technology of Cognitive and Noncognitive Skill Formation JF - National Bureau of Economic Research Working Paper Series VL - No. 15664 PY - 2010 Y2 - February 2010 UR - http://www.nber.org/papers/w15664 L1 - http://www.nber.org/papers/w15664.pdf N1 - Author contact info: Flavio Cunha Department of Economics University of Pennsylvania 160 McNeil Building 3718 Locust Walk Philadelphia, PA 19104-6297 Tel: 215/898-5652 E-Mail: fcunha@sas.upenn.edu James J. Heckman Department of Economics The University of Chicago 1126 E. 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu Susanne Schennach University of Chicago Department of Economics 1126 E. 59th Street Chicago, IL 60637 E-Mail: smschenn@uchicago.edu AB - This paper formulates and estimates multistage production functions for children's cognitive and noncognitive skills. Skills are determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of production technologies based on nonlinear factor models with endogenous inputs. A by-product of our approach is a framework for evaluating childhood and schooling interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of the same bundle of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle in the production of cognitive skills. It is roughly constant across stages of the life cycle in the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For most configurations of disadvantage, our estimates imply that it is optimal to invest relatively more in the early stages of childhood than in later stages. ER -