Children's cognitive development: does
parental wage employment matter?
Author links open overlay panelLinh Nguyen a, Huu-Luat Do b
a
Economy & Environment Partnership for Southeast Asia (EEPSEA), University of
Economics Ho Chi Minh City (UEH), Viet Nam
b
School of Economics, University of Economics Ho Chi Minh City (UEH), Viet
Nam
Received 28 October 2023, Revised 1 April 2024, Accepted 3 May 2024, Available online
11 May 2024, Version of Record 21 May 2024.
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Highlights
• •
How parents’ wage jobs affect children’s cognitive skill in developing countries.
• •
Fathers’ wage employment results in high cognitive ability of 8-year-old children.
• •
Similar effect is not observed for the case of 12-year-old children.
• •
There is no found effect of mothers’ wage employment on children’s cognitive
skill.
Abstract
Parental and family backgrounds play crucial roles in driving children’s cognitive
development. However, in developing countries, self-employment is far more prevalent
than wage employment. Despite its significance, limited research has examined how
parental employment status influences cognitive development within this context. Given
the potential benefits of wage employment for cognitive development, this study
examines whether parents’ wage jobs could positively affect children’s cognitive skills.
Using data on children aged 8-12 years old in Ethiopia, India, and Vietnam from the
Young Lives Survey, we employ a value-added specification to analyze cognitive
formation. Our findings reveal that fathers’ wage jobs have a positive effect on the
cognitive scores of 8-year-old children in Ethiopia and Vietnam, ranging from 0.116 to
0.210 standard deviations of cognitive scores. The effect from fathers’ wage jobs is
sizable compared to the effects from family, school, and neighborhood characteristics.
However, such an effect is not found for 12-year-old children. By causal mediation
analysis, it is proved that father wage jobs affect cognitive skills through material
investment for 8-year-old children in Vietnam and Ethiopia. Our study provides the first
empirical evidence regarding the effect of parental employment on the cognitive
development of their children in the context of developing countries. Moreover, our
empirical findings suggests that policies aimed at facilitating the transition of from
informal to formal employment in developing countries may enhance human capital
development.
Introduction
Cognitive ability is defined by the American Psychological Association as referring to the
skills involved in perception, learning, memory, understanding, awareness, reasoning,
judgment, intuition, and language (VandenBos, 2007) which commonly measured by IQ
scores and standardized achievement tests (Kautz et al., 2014). Cognitive development
in childhood s widely recognized as a key predictor of individual success and societal
well-being (Kautz et al., 2014, Ozawa et al., 2022, Currie, 2009, Hanushek and
Woessmann, 2008). Therefore, researchers have extensively investigated the
determinants of cognitive skills, with significant emphasis placed on the role of parents
and households (Carneiro et al., 2003). In contemporary families, where parental
influence is paramount, parental employment emerges as a crucial factor shaping
cognitive development through various pathways, particularly parent-child interactions
(Heinrich, 2014, Ruhm, 2004). Understanding how different aspects of parental
employment impact cognitive development is essential for comprehensively addressing
factors that contribute to children's cognitive skills and overall well-being.
In developing countries, where nearly three-quarters of the workforce are self-
employed, this study poses a significant question: does parental wage employment or
self-employment influence children’s cognitive development? This inquiry holds
importance for several reasons. Firstly, the prevalence of self-employment in such
countries is remarkably high, with over half to three-quarters of workers in regions like
Sub-Saharan Africa, Southern Asia, and South-Eastern Asia and the Pacific being self-
employed (Fields, 2019). Secondly, in the context of developing countries, wage jobs and
other forms of employment often entail markedly different working conditions that can
impact the environment for child development (Chen and Doane, 2008, Heintz and
Valodia, 2008). Wage jobs, with their favorable features, may enable parents to invest
more resources and care into their children’s cognitive development (Kalil, 2015,
Khanam and Nghiem, 2016, Yeung et al., 2002). Thirdly, understanding the relationship
is important for designing and evaluating human capital policies tailored to the specific
context of such countries. While many policies in such countries tend to focus on school
interventions (Hanushek, 2009), numerous studies suggest that interventions in the
early stages of childhood yield greater benefits than those implemented later (Blomeyer
et al., 2009, Coneus et al., 2012, Cunha and Heckman, 2007). Thus, policies solely
targeting schools in later stages may not fully address the environment influences
during the crucial early periods (Carneiro et al., 2003). Answering this question will
contribute valuable evidence in the debate regarding the effectiveness of family policies
compared to school policies. Furthermore, given the prevalence of self-employment
(Fields, 2013, Fields, 2019), human capital policies aimed at transitioning individuals
from self-employment to wage employment could have a significant impact on societal
development.
Nevertheless, despite the wealth of literature on the influence of parental employment
on children’s cognitive development (e.g., Harvey, 1999, Ruhm, 2004, Heinrich, 2014,
Rege et al., 2011), it remains challenging to find a definitive answer to this question.
While existing studies delve into various aspects of parental employment, they
predominantly focus on fundamental factors such as expenditure and investment in
relation to job earnings (Stevens & Schaller, 2011), parental time and caring in relation
to work schedule and conditions (Baker and Milligan, 2008, Goldberg et al., 2008) and
parenting behaviours in relation to work stress (Mauno et al., 2017). These studies
provide valuable insights but often overlook other characteristics of parental
employment that could significantly impact the home environment and subsequently
affect children’s cognitive development. Specifically, there is a gap in research regarding
the distinct effects of wage employment versus self-employment on parental work
dynamics and their subsequent implications for children's cognitive development.
Some research that directly address the topics of wage employment or self-employment
fall short of providing satisfactory answers to the proposed question. Some research has
explored the disadvantages associated with low wages in wage jobs and the stringent
schedules often accompanying mother’s wage jobs, particularly concerning young
children (Hilbrecht and Lero, 2014, Wellington, 2006). However, these studies
primarily examine the features of wage jobs within developed countries, which may
differ significantly from those in developing countries. Moreover, the existing literature
in developing countries is insufficient to fully address the proposed question. Previous
studies on self-employment, informality or non-standard work and their impact on
children primarily focus on mother’s employment and its effect on young children
(Cassirer and Addati, 2017, Shukia and Messo, 2020).
In conclusion, a research gap exists regarding the effect of parental wage employment or
self-employment on children’s cognitive development. To be more specific, there are few
studies that comprehensive address the unique characteristics of wage employment or
self-employment in developing countries within the context parental employment and
its impact on children. The importance of this question, coupled with the identified
research gap, serves as the primary motivation for undertaking the current study.
The current study examines the impact of parental wage employment on children’s
cognitive development, specifically aiming to determine whether parents’ wage jobs
have a positive effect on child cognitive skills. To achieve this, the study employs the
value-added approach, similar to that utilized by Todd and Wolpin (2003), and employs
data from the Young Lives Survey for Ethiopia, India, and Vietnam. These data are
sourced from the young cohort of children in Rounds 3 and 4 of the project.
The findings indicate a positive relationship between fathers’ wage employment and the
cognitive skills of 8-year-old children in both Ethiopia and Vietnam, with a significant
effect size. However, this effect was not observed among 12-year-old children. These
results are aligns with the hypothesis that family characteristics play a crucial role in
shaping children’s development during early stages, consistent with findings from many
previous studies (Cunha and Heckman, 2008, Heckman, 2006). Moreover, the study
employs causal mediation analysis to elucidate the channels underlying this
relationship. It reveals that father's wage jobs lead to an increase total expenditure on
children, thereby facilitating cognitive development. This underscores the potential of
policies aimed at providing wage jobs to parents, not only in fostering human capital
development but also facilitating a beneficial transition from informal to formal
employment in developing economies.
The remainder of the paper is structured as follows. Section 2 reviews various studies on
wage employment, the relationship between wage employment and cognitive skills, and
factors that mediate this relationship. Section 3 describes the methods and data, Section
4 presents the results, Section 5 discusses the policy implications of our findings, and
Section 6 concludes.
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Section snippets
Wage employment
In the classification of ILO (ICSE-18), wage employment refers to workers who are
employed and paid formally or informally but do not have the right to own the
businesses they are working for (ILO, 2018). Such employees could have permanent
contracts then are referred as “regular employees” in literature (Ghose, 2004), or short-
term/seasonal contracts then are referred as “casual laborers” in literature. In this
study, wage employment focus on regular employees and the study compares it with
Data
The study employs data from the Young Lives Survey which is a longitudinal dataset
tracking children’s development in four developing countries: Ethiopia, Peru, India, and
Vietnam. The Young Lives Survey is a collaborative research project by the Oxford
Department of International Development. Two groups of children in each country have
been tracked by the project: a young cohort of 2,000 children born in 2001-2002 and an
old cohort of 1,000 children born in 1994–1995. The project has collected
Descriptive statistics
The descriptive statistics of the data are presented in Table 2 and Table 3. The cognitive
scores in Round 4 have a higher dispersion than the scores in Round 3. As indicated in
Section 2, the data show low percentages of parents in wage jobs. Only 15.4% – 22.1% of
fathers have wage jobs, with the highest percentage being in Ethiopia for both rounds.
The percentages of mothers with wage jobs are even lower than that of fathers at only
6%–8%, except for Vietnam, where the percentage is nearly
Discussions
Numerous studies emphasize the importance of early interventions rather than late
interventions in cognitive development (Cunha and Heckman, 2008, Heckman, 2006)
and policies for such interventions (Carneiro and Heckman, 2003, Heckman, 2000).
Cognitive development depends on specific circuits that are particularly sensitive in the
early periods of life (Knudsen et al., 2006); therefore, cognitive development is more
sensitive earlier in life rather than later (Cunha & Heckman, 2007). This
Conclusion
This study investigates the impact of parental wage employment on children's cognitive
development, particularly focusing on households in developing countries. Existing
literature suggests that households with wage-employed parents often exhibit
characteristics conducive to children's cognitive development. Hence, the study
hypothesizes a positive association between parental wage employment and children's
cognitive skills, aiming to provide empirical evidence supporting this relationship.
CRediT authorship contribution statement
Linh Nguyen: Conceptualization, Methodology, Investigation, Writing – original draft,
Writing – review & editing, Formal analysis. Huu-Luat Do: Conceptualization,
Investigation, Methodology, Writing – original draft, Writing – review & editing,
Supervision, Project administration.
Declaration of competing interest
The authors declare that they have no known competing financial interests or personal
relationships that could have appeared to influence the work reported in this paper.
Acknowledgement
The authors are grateful for valuable comments provided by Stephen Newbold at the
University of Wyoming and participants of the STBI seminar at the University of
Economics Ho Chi Minh City. We would also like to express our gratitude to the three
anonymous reviewers for their valuable comments and suggestions. This research is
funded by University of Economics Ho Chi Minh City, Vietnam.
