Measuring Investment in Human Capital Formation: An Experimental Analysis of Early Life Outcomes

The literature on skill formation and human capital development indicates that early investment in children is an equitable and efficient policy with large returns in adulthood. Yet little is known about the mechanisms involved in producing these long-term effects. This paper presents early evidence on the nature of skill formation based on an experimentally designed, home visiting program in Ireland targeting disadvantaged families- Preparing for Life (or PFL). We examine the impact of investment in utero and up to six months of age on a range of both parental and child outcomes. Using the methodology of Heckman et al. (2010a), permutation testing methods and a stepdown procedure are applied to account for small sample size and the increased likelihood of false discoveries when examining multiple outcomes. The results show that the program impact is concentrated on parental behaviors with little impact on key domains such as birth weight or early child development. This indicates that home visiting programs can be effective at offsetting deficits in parenting skills within a relatively short timeframe, yet continued investment may be required to observe direct effects on child development