Parental investment and the joint evolution of children’s cognitive and non-cognitive skills: evidences in Vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM ERASMUS UNIVERSITY ROTTERDAM INSTITUTE OF SOCIAL STUDIES 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 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE 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 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 noncognitive 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 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 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 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 and the age of 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 TABLE OF CONTENTS ABSTRACT i ABBREVIATION iv LIST OF FIGURES .v LIST OF TABLES .vi Chapter INTRODUCTION 1.1 Problem statement 1.2 Research objectives 1.3 Scope of the study 1.4 Structure of the thesis Chapter LITERATURE REVIEW 2.1 Human capital theory: skills matter 2.2 Cognitive skills and non-cognitive skills: measures and impacts 2.3 Determinants of skill development 2.3.1 Genetic endowment 2.3.2 Environment 2.4 Dynamics of skill development 11 2.4.1 2.5 Critical and sensitive periods: timing of parental investment 12 Analytical framework 13 Chapter RESEARCH METHODOLOGY 15 3.1 Methodology 15 3.1.1 Technology of skill formation 15 3.1.2 Genetic endowment – Initial conditions 17 3.1.3 Method in cognitive, non-cognitive skills measurement: Latent variables 18 3.1.4 3.2 Instrument Variables 18 Data 19 3.2.1 Data source 19 3.2.2 Variables description 21 Chapter RESEARCH RESULTS 25 4.1 Overview 25 ii 4.2 Descriptive statistics 28 4.2.1 Summary statistics 28 4.2.2 Bivariate analysis 36 4.2.3 Empirical results 39 Chapter CONCLUSIONS 57 5.1 Conclusion 57 5.2 Policy implication .59 5.3 Limitations and further research .59 REFERENCES 61 APPENDIX 67 iii 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 Table 17: Results - Round - Age (Detailed expenditure) Dependent variable: Cognitive skills – Age OLS Model Model (1) (2) CH health 0.079 -0.451 (0.828) (0.830) FIML Model Model (3) (4) 0.057 -0.279 (0.707) (0.698) Clothing exp 0.048** (0.019) 0.043** (0.018) 0.024 (0.016) 0.020 (0.015) Education exp -0.004 (0.010) 0.001 (0.009) 0.0002 (0.006) -0.001 (0.006) 0.019*** (0.004) 0.018*** (0.004) 0.018*** (0.004) 0.018*** (0.005) CH male -0.471 (1.971) -0.819 (1.985) -1.923 (1.637) -1.797 (1.610) CH siblings -1.781 (1.243) -1.278 (1.284) -1.410 (0.943) -1.165 (0.950) 19.82*** (3.834) 17.57*** (3.918) 22.63*** (3.434) 21.09*** (3.480) Parent altruism 6.729 (7.829) 7.939 (7.854) 7.599 (6.504) 10.79* (6.344) CG complete Primary school 6.104** (2.892) 3.050 (2.938) 3.846 (2.347) 1.600 (2.364) CG complete Secondary school 12.53*** (3.015) 10.79*** (3.039) 12.28*** (2.484) 10.45*** (2.493) CG complete Vocational/High school 17.15*** (4.275) 16.67*** (4.236) 16.35*** (3.436) 15.51*** (3.399) CG complete University or higher 22.30*** (6.145) 22.88*** (6.916) 23.62*** (4.668) 23.04*** (4.707) 3.500 (2.990) 3.751 (3.057) 4.474* (2.525) 3.667 (2.513) Presents exp Preschool HH social connectedness index 71 Dependent variable: Cognitive skills – Age OLS Model Model (1) (2) HH size -0.110 0.151 (0.856) (0.888) HH urban FIML Model Model (3) (4) 0.716 1.196* (0.624) (0.621) 21.81*** (2.812) 25.28*** (3.691) 22.25*** (2.246) 23.07*** (2.685) 0.004 (0.010) -6.91e-05 (0.009) -0.0253 (0.016) -0.0226 (0.015) HH urban * Clothing exp -0.049*** (0.019) -0.047** (0.018) 0.0005 (0.006) 0.001 (0.007) HH urban * Present exp -0.0145*** (0.00452) -0.0134*** (0.00439) -0.0147*** (0.00435) -0.0132*** (0.00431) HH urban * Edu exp CM Social Economic Status CM Social Problem Constant Observations -0.320*** (0.0681) -0.294*** (0.0592) -97.74*** (16.23) -82.77*** (12.45) -33.85*** (7.967) -26.87*** (8.338) -40.38*** (6.543) -36.08*** (6.692) 1,344 1,292 1,970 1,970 72 Table 18: Results on cognitive skills - Round - Age (Detailed expenditure) Dependent Variable: Cognitive skills - age OLS Model Model (1) (2) Cognitive skills 0.015*** 0.016*** (0.004) (0.004) FIML Model (3) 0.014*** (0.004) Model (4) 0.015*** (0.004) Clothing exp 0.002*** (0.001) 0.002** (0.001) 0.002*** (0.001) 0.002*** (0.001) Education exp 0.001*** (0.0002) 0.001*** (0.0002) 0.001*** (0.0002) 0.001*** (0.0001) 0.000373 (0.000468) 0.000358 (0.000451) 0.000308 (0.000459) 0.000243 (0.000493) 0.436 (0.504) 0.596 (0.503) 0.277 (0.449) 0.530 (0.426) CH male 1.121*** (0.245) 1.140*** (0.248) 1.001*** (0.230) 1.022*** (0.220) CH siblings -0.774*** (0.199) -0.560*** (0.197) -0.747*** (0.154) -0.413*** (0.145) CH years of schooling 5.507*** (0.384) 5.217*** (0.390) 5.989*** (0.361) 5.540*** (0.341) CH height 0.984*** (0.130) 0.785*** (0.129) 1.098*** (0.123) 0.805*** (0.110) CG complete Primary school 1.918*** (0.342) 1.013*** (0.354) 2.283*** (0.307) 1.138*** (0.308) CG complete Secondary school 2.751*** (0.352) 1.870*** (0.364) 2.956*** (0.322) 1.894*** (0.321) CG finish Vocational /High school 2.638*** (0.471) 1.764*** (0.510) 2.894*** (0.402) 1.752*** (0.409) 3.001*** 2.451*** 3.240*** 2.203*** Presents exp Quality of CG-CH relationship 73 Dependent Variable: Cognitive skills - age OLS Model Model (1) (2) CG complete (0.554) (0.584) University or higher CG trust index -0.495** -0.510** (0.228) (0.225) FIML Model (3) Model (4) (0.513) (0.482) -0.375* (0.210) -0.280 (0.198) HH social connectedness index -1.593 (1.839) -1.692 (1.917) -0.224 (1.648) -0.0110 (1.606) HH size -0.261* (0.149) -0.278* (0.146) -0.333*** (0.110) -0.331*** (0.0966) 4.008*** (0.457) 3.860*** (0.687) 3.942*** (0.420) 4.687*** (0.536) HH urban * Clothing exp -0.002** (0.000764) -0.002* (0.0008) -0.001** (0.000647) -0.001* (0.001) HH urban * Edu exp -0.001*** (0.0002) -0.0007*** (0.0002) -0.001*** (0.0002) -0.0008*** (0.0002) HH urban * Presents exp -0.002** (0.0007) -0.001* (0.001) -0.001** (0.001) -0.001* (0.001) HH urban CM Social Economic Status CM Social Problem Constant -10.05*** (1.014) Observations 1,454 Robust standard errors in parentheses *** p