The Changing Dimensions of Child Development

This paper uses the data on child development collected around the evaluation of a nursery program to estimate the details of the process of human development. We model development as made of three latent factors, reflecting health and cognitive and socio emotional skills. We observe children from age 1 to age 6. We assume that, at each age, these three factors interact among themselves and with a variety of other inputs to determine the level of development at following ages. Relative to other studies, the richness of the data we use allows us to: (i) let the dynamics be rich and flexible; (ii) each factor can play a role in the production of any other factor; (iii) the function changes with age; (iv) parental investment is treated as endogenous. We find that the dynamics of the process can be richer than usually assumed, which has important implications for the degree of persistence of different inputs in time. Persistence also changes with age. The endogeneity of investment is also important.