Human Capital Development

Abstract

We estimate a dynamic model of socio-emotional skill development between ages 8-22 for a Peruvian cohort born in 1994. At age eight there is no wealth gradient, in contrast to cognitive skills. However, by age 12 inequalities emerge and widen through age 19, driven by differential household investments, and cross-productivity with cognitive skills. In early adulthood, we separate socio-emotional skills into two distinct domains – social skills and task effectiveness – that evolve differently, and are differently correlated with risky behaviors such as smoking or taking drugs. Unequal initial household resources perpetuate inequality across generations through cognitive and task effectiveness skills.