Evaluating Early Childhood Policies: An Estimable Model of Family Child Investments

I develop and estimate a technology of skill formation nested within a collective model of household behavior to evaluate the effect of various early childhood interventions. The model incorporates different channels of parental investments in children such as time, material investments, and childcare services. I estimate the model in a novel dataset from Chile and evaluate the effects on child development of three policies currently operating in the country: cash transfers, childcare subsidies, and subsidies to child-specific goods. In Chile, as is common in various countries implementing cash transfers to poor households, women are the recipient of cash transfers in bi-parental households with the idea that cash in the hands of women translate into better child outcomes. To allow for different outcomes depending on the recipient of cash transfers, in the model, household decisions are the outcome of a bargaining process between parents with different preferences. I find that cash transfers to women have limited effect on their bargaining power and that subsidies to child-specific goods are much more effective than childcare subsidies or cash transfers. Childcare subsidies increase female labor force participation but do not raise significantly skills of children.