UNIVERSITY OF ECONOMICS ERASMUS UNIVERSITY ROTTERDAM HO CHI MINH CITY INSTITUTE OF SOCIAL STUDIES VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS PARENTAL INVESTMENT AND THE JOINT EVOLUTION OF CHILDREN’S COGNITIVE AND NON-COGNITIVE SKILLS: EVIDENCES IN VIETNAM BY TRAN KHANH HOA MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, December 2017 TIEU LUAN MOI download : skknchat@gmail.com TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS PARENTAL INVESTMENT AND THE JOINT EVOLUTION OF CHILDREN’S COGNITIVE AND NON-COGNITIVE SKILLS: EVIDENCES IN VIETNAM A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By TRAN KHANH HOA Academic Supervisor: Dr. PHAM KHANH NAM HO CHI MINH CITY, December 2017 TIEU LUAN MOI download : skknchat@gmail.com TIEU LUAN MOI download : skknchat@gmail.com DECLARATION In order to fulfill the requirements for the degree of Master of Art in Development Economics to Vietnam – The Netherlands Programme (VNP), this thesis entitled “Parental investments and the joint evolution of children’s cognitive and non- cognitive skills: Evidence in Vietnam” is submitted. This declaration certify that this thesis constitutes on my original work only. All materials used in this thesis have been acknowledged and cited properly following the Programme’s standards TRAN KHANH HOA TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS Academically, I would like to express my sincere gratitude to Dr.
Pham Khanh Nam, Dr. Truong Dang Thuy and Mr. Do Huu Luat for the valuable comments, instructions and support, without which my thesis would have not been completed. Personally, I would like to thank my big family, my loved one and friends for the great care, understanding, encouragement, tolerance and patience during my tough time of writing the thesis.
Tran Khanh Hoa TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Given the importance of skill set as a predictor of life outcomes, this study investigates the effect of parental investment on the development of cognitive and non-cognitive skills of 2,000 children, who were tracked from age 1 to age 12, using longitudinal data from Young Lives project in Vietnam. A model of skill formation is estimated using ordinary least squares and full information maximum likelihood as well as instrumental-variables to cope with missing values and potential endogeneity. Cognitive and non-cognitive skills are latent variables obtained from confirmatory factor analysis. There are three important findings in this study.
Firstly, the results support that parental investment plays a crucial role in the development of both cognitive and non-cognitive skills in the first 12 years of child’s life. Secondly, there is compelling evidence for the presence of self-productivity of cognitive-skills as well as cross-productivity from cognitive skills to non-cognitive skills and vice versa. Thirdly, the time span until the age of 12 is found to be critical period for the development of cognitive skills while the age of 5 and the age of 8 are sensitive periods for cognitive skills relative to the age of 12. These findings support policy towards an education reform which help to promote not only cognitive skills but also non-cognitive skills; and policy towards an early childhood intervention programs, which aim at children living under disadvantage circumstances.
JEL Classification: Keywords: parental investment, cognitive skill, non-cognitive skills, critical and sensitive periods, children i TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS ABSTRACT .iv LIST OF FIGURES .v LIST OF TABLES .vi Chapter 1 INTRODUCTION. Scope of the study. Structure of the thesis. 4 Chapter 2 LITERATURE REVIEW.
Human capital theory: skills matter. Cognitive skills and non-cognitive skills: measures and impacts. Determinants of skill development. Dynamics of skill development.
Critical and sensitive periods: timing of parental investment. 13 Chapter 3 RESEARCH METHODOLOGY. Technology of skill formation. Genetic endowment – Initial conditions.
Method in cognitive, non-cognitive skills measurement: Latent variables. 21 Chapter 4 RESEARCH RESULTS. 25 ii TIEU LUAN MOI download : skknchat@gmail. Limitations and further research.
67 iii TIEU LUAN MOI download : skknchat@gmail.com ABBREVIATION CDA Cognitive Developmental Assessment EGRA Early Grade Reading Assessment FIML Full Information Maximum Likelihood OLS Ordinary Least Square PPVT Peabody Picture Vocabulary Test PRF Psychosocial Risk Factor YL Young Lives SDG Sustainable Development Goals UIS UNESCO Institution of Statistics iv TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 1: A model of parent-child genetic and environment effects. 8 Figure 2: A framework of skill development. 12 Figure 3: Analytical framework. 14 Figure 4: Expenditure on education from government and household, 2009-2013.
27 Figure 5: Household average expenditure per student, all level of education, by income quantile, 2012. 27 Figure 6: Household average expenditure per student, by level of education and location, 2012. 28 Figure 7: Scatter plots - Cross productivity. 81 Figure 8: Scatter plots - Self-productivity.
81 Figure 9: Scatter plots - Cognitive skills vs Expenditure. 82 Figure 10: Scatter plots - Non-cognitive skills versus expenditure. 84 v TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 1: Variable description. 22 Table 2: Summary statistics - Round 1 (Age 1).
29 Table 3: Summary statistics - Round 2 (Age 5). 30 Table 4: Summary statistics - Round 3 (Age 8). 31 Table 5: Summary statistics - Round 4 (Age 12). 32 Table 6: Pairwise rank correlation matrix .35 Table 7: Reults - Round 1 - Age 1 .40 Table 8: Results - Round 2 - Age 5 .42 Table 9: Results on cognitive skills - Round 3 - Age 8 .45 Table 10: Results on non-cognitive skills - Round 3 - Age 8 .48 Table 11: Results on cognitive skills - Round 4 - Age 12 .50 Table 12: Results on non-cognitive skills - Round 4 - Age 12 .52 Table 13: Identification of sensitive periods.
56 Table 14: Main characteristics of provinces selected. 67 Table 15: Questions in measurement of non-cognitive skills .68 Table 16: Factor loading outcomes .70 Table 17: Results - Round 2 - Age 5 (Detailed expenditure) .71 Table 18: Results on cognitive skills - Round 3 - Age 8 (Detailed expenditure) .73 Table 19: Results on non-cognitive skills - Round 3 - Age 8 (Detail expenditure) .75 vi TIEU LUAN MOI download : skknchat@gmail.com Table 20: Results on cognitive skills -Round 4 - Age 12 (Detail expenditure). 77 Table 21: Results on non-cognitive skills - Round 4 - Age 12 (Detail expenditure) 79 vii TIEU LUAN MOI download : skknchat@gmail.com TIEU LUAN MOI download : skknchat@gmail.com “Human development is economic development.” James Heckman, Nobel Prize Laureate. TIEU LUAN MOI download : skknchat@gmail.com TIEU LUAN MOI download : skknchat@gmail.com Chapter 1 INTRODUCTION 1.
Problem statement Development of a child from early childhood to adolescence has always been a great concern of parents and the society. Evidence from recent interdisciplinary studies have showed that child development, particularly development of cognitive and non-cognitive skills, accounts largely for future life outcomes of a child. In particular, development during childhood affect education, health, labor market outcomes, and social engagement (Francesconi & Heckman, 2016). For example, Heckman et al.
(2006) found out in the US that schooling decisions, wages and work experience are effected by cognitive and non-cognitive skills. Another example from Sweden, Lindqvist and Vestman (2011) pointed out the role of cognitive and non- cognitive abilities in predicting labor force participation and wages among skilled and unskilled workers. Cognitive skills concern about child’s general intelligence while non-cognitive skills reflect child’s personality traits (Borghans et al. Skills are shaped and influenced by both genetic endowment and factors from the environment.
Although genetic endowment is critical and unchangeable, the expression of genes can vary depending on different environment factors. Among the factors, factors from family environment such as parental characteristics, parenting styles, family socioeconomic condition, parental investment, etc., are the most important to child development. Knowing when parental investment is most effective for child’s skill development is of policy importance. Since skill development is a dynamic rather than a static process, there are two important features to be noticed.
Firstly, cognitive 1 TIEU LUAN MOI download : skknchat@gmail.com and non-cognitive skills can reinforce each other in a mechanism called self- productivity and cross-productivity (Cunha & Heckman, 2008). Self-productivity (or cross-productivity) means a higher stock of skills in one period can create higher stocks of skills (or higher stocks of another skill) in the next period. Secondly, there are critical and sensitive periods for skills acquisition because investment at different stages of the life cycle may have different impacts on cognitive and non-cognitive skills. “Sensitive period” is a period where parental inputs are more productive than in other stages.
And “critical period” is a period in which investment is only productive in that period. Understanding of sensitive and critical periods are useful, especially to policy makers. For example, policies which aim to subsidize investment to disadvantaged children could be more effective when it is provided to the children at the right time. So far, there is more supporting evidence from developed countries than from less developed countries on the discussion above regarding the timing of parental investment and the evolution of cognitive and non-cognitive skills throughout multiple stages of life.
Meanwhile, it is essential to learn about the topic in emerging economies because human development is the key to economic development. In Vietnam, a skilled workforce is crucially needed for economic modernization. The STEP (Skills Towards Employment and Productivity) survey conducted in Vietnam by World Bank showed that the proportion of jobs that using analytical and interpersonal skills has increased significantly since 1998. As Vietnam is shifting to more nonagricultural sectors, it is implied that more attention should be given to equip the workforce with essential skills such as cognitive and non-cognitive skills.
This research identifies two concerns about skill development in Vietnam. First, the general education in Vietnam has long placed great emphasis on the acquisition of knowledge or basic cognitive skills but not on soft skills or non-cognitive skills such as self-esteem or self-control. Whereas, cognitive and non-cognitive skills should receive equal attention, in line with “cross productivity” mechanism. Second, 2 TIEU LUAN MOI download : skknchat@gmail.com parents, especially those with disadvantaged conditions, has neglected the importance of early development of their children.
The children receive inadequate investment from their parents because the parents might not be aware of the importance of investment on children or because the lack of support from the government or social groups. Hence, it is suggested that policies should help raise parents’ awareness and provide parents with necessary support from very early stages of raising their children. The effectiveness of the intervention may lie on the timing of the investment. Evidence for sensitive and critical periods of skill development may provide an answer to whether more investment should be made during early childhood.
Research objectives Given the problem stated above, this research has three main objectives: - Firstly, to investigate the effect of parental investment on the development of cognitive and non-cognitive skills over multiple stages of childhood, along with other determinants such as household and community characteristics. - Secondly, to find evidence for the presence of the reinforcement mechanism called self-productivity and cross-productivity. - Thirdly, to identify critical and sensitive periods for investing in the development of cognitive and non-cognitive skills. The finding might be useful in policy making process regarding designing interventions, remediation programs for disadvantaged children.
Scope of the study To achieve the research objectives, the study investigates 2,000 children from 5 provinces in Vietnam (Lao Cai, Hung Yen, Da Nang, Phu Yen and Ben Tre). These children were born in 2001-2002 and were tracked from the age of 1 to the age of 12. The data is collected from four rounds survey of the Young Lives project in 2002-3, 2006-7, 2009-10 and 2013-14. 3 TIEU LUAN MOI download : skknchat@gmail.