Essays on Human Capital Formation

This dissertation consists of three essays on the economics of human capital formation. In these essays, I explore how parents determine the skills developed in children, how these skills lead to important economic outcomes and the issues involved in the measurement of these skills in children. In the first chapter, "The Effect of Maternal Psychological Distress on Children's Cognitive Development'', I study the relationship between maternal mental health and children's cognitive skills. I develop a model that allows me to separate the different mechanisms that relate maternal mental health to children's cognition. In order to identify the causal effect of maternal mental health, I exploit variation among U.S. states in mental health insurance coverage laws, which improved access to mental health care services. I find that maternal mental health problems mainly affect children through a decrease in the productivity (quality) of maternal time investments. The second chapter, "The Economic Value of Breaking Bad: Misbehavior, Schooling and the Labor Market'', studies the relationship between childhood misbehavior, schooling and labor market outcomes. We show that externalizing behavior (linked, for example, to aggression), reduces educational attainment yet increases earnings. This finding illustrates our main point that, different than cognition and health, non-cognitive skills can be productive in some economic contexts and counter-productive in others. As a result, policies designed to promote human capital accumulation could have mixed effects or even negative economic consequences, especially for policies targeting non-cognitive skill formation for children aimed solely at improving educational outcomes. In the third and final chapter, "When Mothers and Teachers Disagree: Observer Reports and Children's Noncognitive Skills'', I explore the methodological challenges involved in measuring noncognitive skills in children. The usual approach involves asking parents or teachers about different child behaviors. This is problematic, as I show that mothers and teachers rarely agree when reporting on these behaviors. More importantly, I show that maternal and teacher reports are measuring different aspects of child development. While teacher reports mainly measure child misbehavior associated with adult risky behaviors, maternal reports also measure behaviors related to the child's mental health