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This paper assesses the effects of household investments through child educating activities on child neurodevelopment between the ages of 3 and 24 months, and evaluates whether investments explain racial and socioeconomic developmental gaps in South America. Quantile regression is used to evaluate the heterogeneity in investment effects by unobserved developmental endowments. The study finds large positive investment effects on early child neurodevelopment, with generally larger effects among children with low developmental endowments (children at the left margin of the development distribution). Investments explain part of the observed racial gaps and the whole socioeconomic developmental gap. Investments may compensate for low endowments and policy interventions to increase investments may reduce early development gaps and result in high social and economic returns.

The Impact of Household Investments on Early Child Neurodevelopment and on Racial and Socioeconomic Developmental Gaps: Evidence from South America