Essays on Human Capital Development

Abstract

This thesis consists of three essays on human capital development across different stages of life course. Human capital development is a dynamic and multifaceted process that affects a wide range of outcomes over the life span. Understanding the dynamic features of this process and identifying its key determinants are crucial for informing policies aimed at enhancing human capital and improving associated economic and social outcomes. The first two chapters focus on one of the fundamental domains of human capital - health. The first chapter models the development of child mental health, focusing on the roles of maternal mental health and time investments. To causally estimate the two-way intergenerational transmission of mental health and the productivity of investment within a unified framework, I formulate the joint production of child and mother mental health while various strategies are employed to address potential econometric issues. Recognising that child mental health is multifaceted, I disaggregate it along three dimensions: behavioural, emotional and social. I find that three domains of child mental health have differential development patterns and are positively interconnected throughout childhood. My results show that maternal mental health significantly affects all dimensions of child mental wellbeing, while time investments only matter for children’s behavioural and social development. I find evidence of intergenerational transmission in mental health, which has important implications for designing health interventions. In the second chapter, I study the dynamics of physical and mental health over the course of working life and examine the impact of employment in different occupations. I develop a dynamic factor model of health development in which various types of occupational employment are key inputs into the production of health. Estimating the model using the German Socio-Economic Panel (SOEP) data, I find that employment in all occupation groups is generally beneficial for both physical and mental health throughout the work span, with the exception of routine abstract jobs which have a small negative effect on mental health in later working life. Non-routine occupations (especially service jobs) tend to have a stronger positive impact on mental health than routine work, while the opposite is true for the effect on physical health.