From Macro Econometric Analysis to Early Childhood Development

1. From Macro Econometric Analysis to Early Childhood Development Jere R. Behrman Universidad de Chile 13 Diciembre 2011

2. 1968-9 Chile/ODEPLAN-MIT-Ford Project: Macroeconometric Modeling • International Team: Hollis Chenery, Richard Eckaus, Paul Rosenstein-Rodan, Carlos Diaz-Alejandro, Edmar Bacha, Peter Clark, LanceTaylor • National Team: Alejandro Foxley, Ana Maria Jul, Ricardo Lira, Cristian Osa • Other National Economists: Ricardo Ffrench-Davis, Joseph Ramos, Vitorio Corbo, Marcelo Selowsky

3. "Sectoral Elasticities of Substitution Between Capital and Labor in a Developing Economy: Time Series Analysis in the Case of Postwar Chile," Econometrica 40:2 (March 1972), 311-328 (Spanish translation in Cuadernos de Economia 9:26, April 1972, 70-88). • "The Determinants of the Annual Rates of Change of Sectoral Money Wages in a Developing Economy," International Economic Review 12:3 (October 1971), 431-447 (Spanish translation in Cuadernos de Economia 9:27, August 1972, 102-119). • "Short-Run Flexibility in a Developing Economy," Journal of Political Economy 80:2 (March/April 1972), 292-313. • "Sectoral Investment Determination in a Developing Economy," American Economic Review 62:5 (December 1972), 825-841.

4. Macroeconomic Policy in a Developing Country: The Chilean Experience, Amsterdam: North-Holland Publishing Company, 1977 (Contributions to Economic Analysis, No. 106). • Foreign Trade Regimes and Economic Development: Chile, New York: Columbia University Press for NBER, 1976 (Special Conference Series on Foreign Trade Regimes and Economic Development, edited by Jagdish Bhagwati and Anne O. Krueger,Vol. 8).

5. Bottom line on macro analysis: • Substantial flexibility and responsiveness to incentives both for capacity utilization and capacity expansion. • Therefore substantial policy distortions through high and high variance barriers to international sector likely to have been costly

8. 2000- Universidad de Chile/Centro Microdatos: Micro Analysis of Household Survey Data • Encuesta Protección Social • National Team: Alberto Arenas, David Bravo, Javiera Vasquez, Sandra Quijada (and the Survey Unit) • International Team: Olivia Mitchell, Petra Todd and Kenneth Wolpin at University of Pennsylvania • Analysis of pension system, schooling • U.S. National Institutes of Aging and Spencer Foundation grants for collaborative research • Exploration of parallel surveys in other LAC countries led by Alberto Arenas and David Bravo, with support from IDB.

9. “The Chilean Pension Reform Turns 25: Lessons from the Social Protection Survey” (with Alberto Arenas de Mesa, David Bravo, Olivia S. Mitchell, Petra E. Todd and with the assistance of Andres Otero, Jeremy Skog, Javiera Vasquez, Viviana Velez-Grajales), in Stephen J. Kay and Tapen Sinha, eds. Lessons from Pension Reform in the Americas. Oxford University Press, 2008, 23-58. • “First-Round Impacts of the 2008 Chilean Pension System Reform” (with Maria Cecilia Calderon, Olivia S. Mitchell, David Bravo, and Javiera Vasquez), Journal of Pension Economics and Finance (revised and resubmitted).

10. “Teacher Labor Markets in Chile” (with David Bravo, Michela Tincani, Petra Todd, Kenneth Wolpin), in progress. • “How Much Might Human Capital Policies Affect Earnings Inequalities and Poverty?” Estudios de Economía 38:1 (June 2011), 9-42. • “Financial Literacy, Schooling and Wealth” (with Olivia S. Mitchell, Cindy K. Soo and David Bravo) American Economic Review. Forthcoming 2012.

11. American Economic Review 2012

12. Estudios de Economía 2011

14. Early Childhood Development • Encuesta Longitudinal de la Primera Infancia (ELPI) • “Tools of the Mind” preschool experiment • National Team: David Bravo, Marthita Kluttig, Daniela Marshall, Pamela Soto, Sergio Urzúa • International Team: Elena Bordova, Angela Duckworth, Patrice Engle, Deborah Leong, Thomas McDade, Whitney Schott • United States National Institute of Child Health and Development grant for analysis

15. “Economic Perspectives on Some Important Dimensions of Early Childhood Development in Developing Countries” (with Sergio Urzúa) in Pia Rebello Britton, Patrice L. Engle and Charles M. Super, eds, Handbook of Early Childhood Development: Translating Research to Global Policy Oxford, UK: Oxford University Press, 2012. • “Cognitive and Non-Cognitive Patterns in Chilean Early Childhood Development: Associations with Income and Other Factors” (with David Bravo, Marthita Kluttig, Daniela Marshall, Whitney Schott, Pamela Soto), 2011. • “Wealth gradients in early childhood cognitive development in five Latin American countries” (with Norbert Schady, Maria Caridad Araujo, Rodrigo Azuero, Raquel Bernal, David Bravo, Florencia Lopez-Boo, Karen Macours, Daniela Marshall, Christina Paxson, and Renos Vakis), Washington, DC: Inter-American Development Bank, 2011.

16. Development of inequality (2011Lancet series on ECD, Engle et al)

17. Cognitive skills are but one component of early childhood development and recent literature suggests possible high payoffs to others as well, such as executive function • Here we look at (1) patterns by income quintile and (2) simple regressions for cognitive and language skills, anthropometrics and motor skills, behavioral and social-emotional skills • Measures of child development not highly correlated

18. Data • Encuesta Longitudinal de la Primera Infancia • First round of data, 2010 • Representative sample of 13,895 children, ages 9-55 months for this presentation (ELPI also includes children 0-8 months) • Includes measures of cognitive, psychosocial, and physical development, as well as parental schooling, income, and household environment

19. Cognitive Skills

22. Anthropometric Measures

23. Motor Skills

28. Behavioral Skills

29. Social/Emotional Skills

32. (negative)

33. (negative)

34. (negative)

35. Graphical Findings (1) • Even at very young ages (9 to 24 months), level differences in cognitive skills are apparent by income quintile, and education and WAIS score of the mother • Divergence in cognitive skills appears to take place after age 3 (between 36 and 40 months) • This divergence is characterized by the lowest quintile not improving, while the highest quintile does improve, as evidenced by TVIP scores

36. Graphical Findings (2) • Patterns by income are less clear for the anthropometric measures • There are differences by income in coordination, and possibly in motor skills • Pronounced level differences in behavioral and socio-emotional indices at young ages • Possible divergence in behavioral development between the highest and lowest quintiles around 40 months

37. Regressions • Regressed each measure on income quintiles and age in month dummies only • Regressed each measure on household environment and parental characteristics, plus age in month dummies When other variables included, income differences less pronounced:

38. Ages 30-53 months

39. Ages 9-53 months

40. Ages 9-53 months

41. Ages 24-53 months

42. Ages 9-53 months

43. Conclusions (1) • When income associations are important, controlling for other factors reveals that mother’s cognitive skills play a key role in “explaining” much of these difference • This is true for both cognitive and non-cognitive measures: coordination, behavior, and socio-emotional skills • For behavioral and socio-emotional skills, having an older and wiser mother is associated with better outcomes

44. Conclusions (2) • Birth weight has persistent and large associations not only with anthropometric measures, but also with coordination, language ability, motor skills, and cognitive performance • Day care enrollment is negatively associated with cognitive performance at young ages, but positively associated with language after 24 months; it is negatively associated with behavioral outcomes for all ages • Females have higher TVIP scores, language ability, better coordination and motor skills, and fewer behavioral social/emotional problems

45. Conclusions (3) • Overall, a wide array of home environmental and parental characteristics are associated with child development when these multiple components of child development are considered. • Important to move beyond associations to estimate causal effects with both 2010 and 2012 ELPI as guide for understanding and policy.