A Quantitative Theory of Early Skills Formation and Parental Choices

Time use surveys show that households with very young children spend more time in child care and work less. Also, college-educated parents spend more time with their off springs. Finally, cognitive test scores are intergenerationally correlated. I build a model of parental choices and both cognitive/noncognitive skills development, embedding the skills formation technology of Cunha, Heckman and Schennach (2010). I find that the model, jointly with properties of the technology, can account for the bulk of such patterns. Simulations show that applying the German child allowances policy to the US would have little eff ect on the intergenerational persistence of skills