Seminario CEDE - Nicolás Badaracco

This paper studies the relationship between school and home investments in the cognitive development of children and the behavior of the actors involved in the process. I employ large-scale administrative and survey data from Chile to estimate how parents and children in primary and secondary school adjust their time investment in response to classroom and teacher quality. Since classroom inputs are not directly observed, I first estimate the production function for cognitive skills that provides measures of classroom and teacher quality. I then estimate the time investment responses to these quality measures. I find that parents of younger children compensate for low quality whereas parents of older children reinforce quality. Students, on the other hand, increase time self-investment in response to higher quality, but the responses are larger for older children. Motivated by the heterogeneity in responses by school grade, I estimate a child development model and characterize the optimal allocation of school resources across grades. I find that it is optimal to allocate relatively more resources to lower grades. Moreover, ignoring the behavioral response of households implies an optimal allocation with substantially lower improvements in cognitive development.

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