Three essays on the economics of human capital development

Abstract

This thesis is concerned with the role of formal schooling in the production of human capital over the lifecycle. While many studies have documented an associated between education and cognitive outcomes, less is known about the extent this association is causal---or the nature of the underlying mechanisms driving any effect. Chapter 1 examines the causal effect of additional secondary schooling on cognitive function in later life, using new methods in causal mediation analysis to explore the role of occupation choice as a key channel. The findings reveal robust evidence that basic education leads to improved working memory, but detect little support for effects on verbal fluency or numeric abilities. Staying in school for an additional year increases the probability of entering a higher status occupation, and an analysis of mechanisms finds that up to about one-fifth of schooling's effect on cognitive outcomes can be explained by occupation choice. However, the estimates are too imprecise to yield firm conclusions. Chapters 2 and 3 are situated in the school choice literature. The promise of school choice is to allow parental preference to influence which school their child attends, weakening the link between residential location and school quality. However, choice is typically constrained---and markets for schools are no exception. Popular schools tend to be oversubscribed, and inevitably many families miss out on a place at their preferred school. Chapter 2 traces the consequences of missing out on a place at a preferred secondary school in England, focusing on long run outcomes, including high-stakes examination results. The analyses do not find evidence that failing to gain a place at a preferred school leads to poorer academic outcomes---but those who miss out are more likely to engage in risky behaviours, drop out of secondary school, and have poorer mental health in adulthood. Finally, Chapter 3 assesses the effects of missing out on a place at a preferred primary school, on cognitive and non-cognitive skill development and parental responses. Little evidence is revealed for a detrimental effect on skill development, but compared with those who get into their preferred school, parents whose child misses out on a place are more likely to invest in private tutoring and exam preparation for selective schools.