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 INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM 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 noncognitive 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 ABBREVIATION LIST OF FIGURES LIST OF TABLES 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: measur 2.3.Determinants of skill development 2.3.1 Genetic endowmen 2.3.2 Environment 2.4.Dynamics of skill development 2.4.1 Critical and sensitive periods: timing of parental investment 2.5.Analytical framework Chapter RESEARCH METHODOLOGY 3.1.Methodology 3.1.1 Technology of skill formation 3.1.2 Genetic endowment – Initial conditions 3.1.3 Method in cognitive, non-cognitive skills measurement: Latent variables 3.1.4 Instrument Variabl 3.2.Data 3.2.1 Data source 3.2.2 Variables descriptio Chapter RESEARCH RESULTS 4.1.Overview ii 4.2.Descriptive statistics 4.2.1 Su 4.2.2 Bi 4.2.3 Em Chapter CONCLUSIONS 5.1.Conclusion 5.2.Policy implication 5.3.Limitations and further research REFERENCES APPENDIX 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 LIST OF FIGURES Figure 1: A model of parent-child genetic and environment effects 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 Table 20: Results on cognitive skills -Round - Age 12 (Detail expenditure) Dependent Variable: Cognitive skills - age 12 OLS Cognitive skills Non-cognitive skills Clothing exp Education exp Presents exp Quality of CG-CH relationship CH male CH siblings CH height CG complete Primary school CG complete Secondary school CG finish Vocational / High school FIML 77 Dependent Variable: Cognitive skills - age 12 OLS Model FIML ( CG complete University or higher HH social connectedness index HH (0 2.28 (0 (0 size (0.0 HH urban (0 HH urban * Clothing exp -0 (0.0 HH urban * Education exp HH urban * Presents exp -0.0 (6.43 0.0002 (0.0004) CM Social Economic Status CM Social Problem Constant Observations Robust standard errors in parentheses *** p