Psychosocial status and cognitive achievement in Peru

• Date: 01 November 2018
• Author: Alan Sánchez,Ingo Outes,Oswaldo Molina
• DOI: http://doi.org/10.1111/rode.12398
• Published date: 01 November 2018

REGULAR ARTICLE

Psychosocial status and cognitive achievement in

Peru

Ingo Outes

1

|

Alan S

anchez

2

|

Oswaldo Molina

3

1

Blavatnik School of Government,

Oxford University, Oxford,United

Kingdom

2

Grupo de An

alisis para el Desarrollo,

Lima, Per

u

3

Universidad del Pacifico, Lima, Peru

Correspondence

Oswaldo Molina, Universidad del

Pacifico, Av. Salaverry 2020, Jes

us Mar

ıa

15072, Peru.

Email: o.molinac@up.edu.pe

Funding Information

This research was partially funded by an

student grant from the Oxford Department

of International Development (Young

Lives Study)

Abstract

This paper assesses the importance of psychosocial status

in the accumulation of cognitive skills during the transi-

tion from mid to late childhood. We use longitudinal data

from a cohort of 700 Peruvian children drawn from a

very rich dataset, the Young Lives Survey, to test the

impact of children’s perception of respect at the age of 8

on cognitive achievement 4 years later, controlling for

cognitive skills at the age of 8, lagged child and house-

hold characteristics, and community fixed effects. This

empirical specification is akin to estimating a conditional

demand function for cognitive skills, which deals with

some of the main pitfalls of skill endogeneity. We find

that poorly respected children are linked to a lower rate

of cognitive accumulation than their better-respected

counterparts. As expected, we also find that previously

accumulated cognitive skills enable higher subsequent

cognitive skill accumulation. We go one step further by

testing and finding evidence of complementarities across

skills. We show that cognitive differences amplify over

time between children with low and high psychosocial

skills. Overall, our results suggest that psychosocial sta-

tus, an aspect little studied in the context of developing

countries, plays an important role in the acquisition of

cognitive skills during childhood.

DOI: 10.1111/rode.12398

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©2018 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/rode Rev Dev Econ. 2018;22:1536–1560.

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INTRODUCTION

Although long understood by other disciplines, It is recently, specially during the last 15 years, that

economists have begun to view the accumulation of human capital as a complex, multidimensional

process whereby different types of skills are shaped over time through parental investments and envi-

ronmental factors. Examining the role of psychosocial competences in the process of human capital

formation is an essential task in this setting. Recent empirical research highlights the importance of

personality traits such as perseverance, self-control and self-esteem in determining both educational

attainment and labor market outcomes (Cunha & Heckman, 2008; Feinstein, 2000; Heckman, Stixrud,

& Urzua, 2006; Claessens, Duncan, & Engel, 2009; Bowles, Gintis, & Osborne, 2001; Carneiro

et al., 2007). These results suggest that psychosocial skills may play an important role in the accumu-

lation of human capital.

In this paper, we assess the role of psychosocial competencies in the formation of cognitive

skills during the childhood period, specifically in the transition from mid to late childhood. The

evidence on the existence of such a relationship is still scarce, especially in the context of develop-

ing countries (Helmers & Patnam, 2011). To assess this relationship, we follow a standard human

capital accumulation approach, whereby current and past cognitive inputs are combined to produce

cognitive skills. In such a framework, past psychosocial skills can be treated as an input in the pro-

duction of cognitive skills. The aim of the paper is twofold: we first seek to test the effect of psy-

chosocial skills on cognitive skill accumulation; and secondly, investigate the existence of

complementarities across skills.

We test these concepts empirically using data from a cohort of 700 Peruvian children drawn

from the Young Lives Survey. The longitudinal dimension of the study allows us to observe each

child twice, first at the age of 8 and again at the age of 12. First, we estimate the impact of cogni-

tive and psychosocial skills at the age of 8 on cognitive skills 4 years later, controlling for child,

household, and community characteristics. Secondly, we explore the existence of skill complemen-

tarities. In particular, we test whether psychosocial status plays an additional role in the formation

of cognitive skills by enhancing the returns to previously accumulated cognitive skills.

The remainder of this paper is organized as follows. Section 2 presents our theoretical and empiri-

cal framework. Data issues and sample characteristics are discussed in Section 3. In Section 4, we

present our main empirical results evidence on the cognitive effect of psychosocial skills. We also

discuss a number of robustness checks. Section 5 discusses our findings on complementarities across

cognitive and noncognitive skills, while Section 6 provides an assessment on the relative importance

of different determinants of cognitive achievement. Finally, Section 7 offers conclusions .

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THEORETICAL AND EMPIRICAL FRAMEWORK

2.1

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Theoretical framework

Our interest lies in understanding the effect that psychosocial skills might have on the acquisition

of later cognitive skills. Accordingly, we follow Cunha, Heckman, Lochner, and Masterov (2006),

and Cunha and Heckman (2008), and formalize the production of skills in the following way:

sk

t¼fk

tðsc

t1;sps

t1Ik

tÞ(1)

where sk

tindicates the stock of skill kin period t. Index kcan therefore take one of two values: c

for cognitive skills, and ps for psychosocial skills. Similarly, Ik

tdenotes skill-specific inputs in per-

iod t,sc

t1and sps

t1are the stocks of cognitive and psychosocial skills accumulated in the previous

OUTES ET AL.

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