investments and continues with education decisions, skills acquisition, on-the-job components. It closes with investments in health.

**Returns to Early Childhood Development Investments.** Recognizing the major dynamic complementarities discussed in Section 2.2 has led to a renewed interest in early childhood investments.<sup>9</sup> A given investment in human capital today not only affects future payoffs but also influences subsequent accumulation of human capital. The result is that human capital accumulation and skill formation should really be seen as a life-cycle, life-long process where returns on early investments are high while remediation later in life is difficult [Cunha et al. (2006)]. Such dynamic complementarity is so strong that early human capital investments and early accumulation of both cognitive and noncognitive skills seem to sort individuals into different paths of lifetime outcomes [Doyle et al. (2009)].

Interventions in this area are varied: they range from childcare programs to nutrition programs, from programs targeting children to programs targeting mothers. They also vary in quality with success crucially dependent on implementation. García et al. (2016) estimate a rate of return of 13% per year for a high-quality early childhood program in the US.<sup>10</sup> Bernal and Fernandez (2013) study the impact of a subsidized community-based childcare program in Colombia<sup>11</sup> finding positive impacts on cognitive development and socioemotional skill (about 0.2 of a standard deviation) but no impact on nutrition. Elango et al. (2016) revisits the evidence on early childhood education concluding that the quality of the service provided is crucial. They estimate that only high-quality means-tested programs are socially efficient (i.e. generates positive net returns at the aggregate level). Berlinski and Schady (2016) provide a review and an interpretation of the evidence in Latin America, confirming the importance of quality. Focusing on two types of programs - home visits and daycare programs - they report positive effects on cognitive skills for all home visit interventions (ranging from 0.2 to 1.2 standard deviations) while both positive and negative effects for day care programs (ranging from –0.2 to 0.2 standard deviations).

While the quality of the intervention matters and the benefit-cost ratios vary for different program, the consensus in the literature is that investing in _comprehensive_ birth-to-five early childhood programs leads to significant returns in the accumulation of subsequent human capital, in labor market outcomes, in health outcomes and in positive social behavior. [Elango et al. (2016); Berlinski and Schady (2016); Heckman and Mosso (2014).]

**Returns to Education Investments.** Returns to education are one of the most estimated coefficient in empirical microeconomics. They have been estimated on a large number of

> 9 Elango et al. (2016) survey early childhood education; Berlinski and Shady (2016) interpret early years interventions in Latin America; Heckman and Mosso (2014) focuses on the economics of human development and social mobility emphasizing the importance of early life conditions; Cunha et al. (2010) provide methods to estimate skill formation starting from early childhood; and Cunha et al. (2006) review and interpret the empirical evidence.

> 10 The Carolina Abecedarian Project (ABC) and the Carolina Approach to Responsive Education (CARE). 11 Hogares Comunitarios de Bienestar (HCB).

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