Policies for the first decades of life

Equitable human capital formation is a fundamental pillar for building more inclusive and prosperous societies. Socioeconomic gaps in skill development begin early in life and continue throughout childhood and adolescence (Berniell et al., 2016; De la Mata et al., 2022). Figure 3.3 shows the association between household socioeconomic status at birth and two key indicators of child development: nutrition and cognitive performance, assessed in the same group of children in Peru at different stages of their childhood and adolescence. Higher values denote a stronger association between household wealth and the development index. The data show that socioeconomic disparities in skills emerge long before children enter formal educationl¹ and remain largely unchanged until the age of 15, when the last measurement is taken².

RED 2016 (Berniell et al., 2016) discusses various reasons that justify State intervention in promoting the development of children and youth. Policies aimed at the early stages of life should focus on improving the conditions for the accumulation of human capital, alleviating the main barriers faced by families, which, as noted, are essentially financial, time, lack of insurance against health events, and knowledge and information obstacles³. A comprehensive approach must account for the diversity of socioeconomic, ethnic and geographic contexts in the region and contemplate the multiple stages of child development, from early childhood to higher education. This set of policies can have enormous social returns and be cost-effective, as has been shown in developing countries (Deming, 2022; Hendren and Sprung-Keyser, 2020). Some of the most promising strategies to reduce these gaps at three major stages of childhood and youth are described below: the first six years of life, the primary and secondary basic education period, and the post-secondary education period.

Financing early childhood is the best investment any Government can make […] If you invest in young children, the gaps between the most and the least vulnerable do not emerge […] There is a great social agreement around early childhood, something that did not happen with primary and secondary education in the countries of Latin America […] Latin American countries work together to design policies and exchange good practices regarding the implementation of early childhood programs.

Based on an interview with Raquel Bernal

Improve the conditions for human capital formation in childhood and adolescence

Adequate human capital development begins in the early years of life and directly impacts well-being and economic success in adulthood. As figure 3 underscores, skill gaps manifest themselves long before children enter formal education, highlighting the importance of intervening in the early years and preschool period. This prevents these gaps from widening and becoming more difficult to close at later stages. This is why the social rates of return on these investments can be particularly high (Cunha and Heckman, 2007). 

Conditional income transfers

A first set of policies to alleviate financial constraints includes subsidies, transfers or the provision of goods and services aimed at child development. Of this package of tools, the role of conditional cash transfers in the countries of the region should be highlighted, with programs currently in force in 19 countries, which in the last decade have covered 20 % of the Latin American and Caribbean population⁴. These programs have a dual objective: to alleviate poverty immediately through transfers to vulnerable families and to promote human capital through conditionality in aspects such as schooling, health care and nutrition (Cecchini and Atuesta, 2017). This affects one of the main channels of intergenerational reproduction of inequality and potentially reduces the need for government assistance in the future. Evidence demonstrates its effectiveness in improving education and child health indicators in the short and long term (see box 3.1.).

Maternal, child and adolescent health promotion

Living conditions at birth are strongly influenced by the home environment and the parents’ economic situation, not only during gestation but also before conception. Maternal and child health policies that ensure healthy development from pregnancy onwards are crucial to reduce the gaps at the root. These include prenatal care programs, nutritional supplementation for pregnant and lactating mothers, and regular pediatric follow-up in the first years of life. 

The increase in non-contributory health insurance during the last decades had a significant impact on the reduction of infant mortality, on the health of newborns, on access to services—mainly in the maternal and infant population—on the availability of more efficient medical services and on the reduction of out-of-pocket expenses, i.e., those to be covered by the family on its own. These effects have been widely documented in various countries in the region⁵.As a collateral effect, programs with benefits tied to the condition of not receiving coverage through contributory systems tend to moderately discourage the search for employment in the formal sector of the economy (Camacho et al., 2014; Conti et al., 2018).

Family planning programs play a crucial role in ensuring that children are born into an environment where parents can provide the care and investment necessary for their development. In Latin America and the Caribbean, according to data from Demographic and Health Surveys (DHS), about half of pregnancies are unplanned and the most disadvantaged families face greater barriers to family planning due to lack of access to quality contraceptive methods and reproductive health services, and limited comprehensive sexuality education in school and family settings.

Teenage pregnancy is one of the most critical challenges in the region, to the point that it presents one of the highest rates worldwide. The adolescent fertility rate in 2022 shows that 52 out of every thousand women between 15 and 19 years of age had a child, compared to a value of 18 for OECD countries and 9 for high-income countries (World Bank, 2024). Teenage pregnancy also implies a marked inequality according to socioeconomic level (figure 4). The perpetuation of these teenage pregnancies in the most vulnerable sectors reinforces intergenerational inequalities (Machado et al., 2023), since young mothers tend to face greater difficulties, for example in completing their education, which has a negative impact on their job opportunities, affecting the development of their children (De la Mata et al., 2022). Strengthening adolescent pregnancy prevention policies and comprehensive sexual education programs is essential to address this problem.

Early interventions and family accompaniment

The involvement of families is crucial for child development. However, this is often limited by the lack of information about the importance of childhood development and the role of the family itself in skill formation (Bernal and Fernández, 2013). Family accompaniment programs, such as home visits by health professionals or social workers, can be very effective, as they provide parents with key information on child development, early stimulation and appropriate care, adapted to their context. In areas with limited access to care centers, these policies are especially valuable (Attanasio et al., 2024).

The Reach Up and Learn program in Jamaica is an innovative case and a reference for the region. Its positive impacts have been sustained, even during the beneficiaries’ adult lives (Gertler et al., 2014; Grantham-McGregor et al., 1991).Following this example, Colombia conducted a larger-scale implementation of this model in a vulnerable population, although it did not sustain the initial effects two years after the intervention was completed (Andrew et al., 2018). Based on lessons from Colombia, the model was adapted for national implementation in Peru with the Cuna Más program. Rigorous evaluations of this program are encouraging, showing positive impacts on child development up to two years after the intervention (Araujo et al., 2021). 

Preschool care and education services offered

Contributing to the early stimulation of children between 0 and 3 years of age is also possible through the provision of childcare services. In this period, formal education is not yet compulsory, so public provision of these services would be key to alleviating the monetary constraints of vulnerable households. Two important factors for the success of these interventions emerge from the evidence: the scale of the intervention and the target group. At large scale, these programs tend to lose quality, especially in the professionalization of caregivers and close follow-up, which is critical to achieving a significant impact. This is relevant in Latin America, where the professionalization of caregivers is still pending (Andrew et al., 2016). Studies in Bolivia, Ecuador and Peru show that many centers do not meet minimum quality standards, particularly in areas such as cognitive and language development (Berlinski and Schady, 2015). Investing in teacher quality in this cycle can generate great benefits, as shown by a study in Ecuador (Araujo et al., 2016). On the other hand, the positive impacts of these programs are usually concentrated in the most disadvantaged groups, so their expansion should be prioritized with good targeting (Bernal and Ramírez, 2019; Hojman and Boo, 2022). 

Formal preschool education is a central pillar for the development human capital in the first years of life. Expanding its coverage is one of the greatest challenges in the region because, as, although it is compulsory in all countries (generally between 4 and 5 years of age), many are still far from achieving universality. Figure 5 shows the gross enrollment rate between 3 and 5 years of age at various countries in the region⁶, with Argentina, Brazil, Ecuador and Uruguay standing out for their high coverage. However, there is a marked socioeconomic gradient throughout the region, with a clear lag in the attendance rate of children from the poorest households. This disparity has worsened in the post-pandemic period, especially in countries such as Argentina, Brazil, Chile, Colombia, Ecuador, Panama and Peru, where the enrollment rate of children from the most vulnerable households has fallen sharply, exacerbating inequalities.

We still have a long way to go, especially because the budgets allocated to investment in early education are still very low.

Based on an interview with Raquel Bernal

Expanding the supply of preschool education can have important social returns, as shown by experiences in the region. Cohorts affected by expansions have shown higher performance in primary education in Argentina (Berlinski et al., 2009) and, in cumulative years of schooling, in Uruguay (Berlinski et al., 2008). New infrastructure construction programs, which may be necessary to increase supply, have a significant cost component. However, given their positive and substantial long-term effects, this type of programs could be cost-effective (Berniell et al., 2016).

The great problem in the region continues to be quality […] The quality of early education has some particularities that are slightly different from that of other educational levels […] Two basic points to guarantee the quality of early education: first, early education programs must have very specific, very prescriptive curricula, with clear learning outcomes; second, the training and professional development of teachers must be ensured.

Based on an interview with Raquel Bernal

In addition to easing the economic burden on families, the expansion of educational provision between 0 and 5 years of age allows parents, particularly mothers, who bear the greatest burden of care, to participate in the labor market without compromising childcare (Berlinski et al., 2011; Berlinski and Galiani, 2007; Morrissey, 2017). Quality time shared between parents and children is critical for early development. These types of policies, along with others related to the formal labor market (such as maternity/paternity leave, sick leave for children, and the possibility of teleworking), play a fundamental role in reconciling work and parenting, ensuring that parents have sufficient time to invest in their children. Given the high level of labor informality in the most vulnerable groups, care provision and preschool education policies have great potential to alleviate the time constraint in these households.

Provision of basic services in housing and surroundings

It is crucial to ensure that households have access to essential public services such as safe drinking water, sanitation, quality energy sources and recreational spaces. These minimum conditions provide families with a healthy environment for the development of their children. Progress in reducing child mortality and chronic malnutrition in recent decades has been driven largely by State investments in infrastructure (Berlinski and Schady, 2015). The provision of safe drinking water, in particular, has proven to be crucial in reducing mortality and improving child health (Waddington and Snilstveit, 2009; Wolf et al., 2018). 

However, access to basic services in the region remains a significant concern. Almost Nearly one in four Latin Americans and Caribbeans live in informal settlements that, due to their condition, have low levels of coverage of basic household services, such as water, sanitation and energy. A high percentage of households in the region do not have access to electricity, especially in rural areas. The use of dirty energy sources for cooking and heating, such as firewood and kerosene, which have significant negative effects on health, is still very common in the poorest households (Álvarez et al., 2024).

Adequate public infrastructure has the advantage of facilitating household resilience to climate impacts. But the quality of the physical space also affects the way in which interaction with other people takes place. These characteristics of the environment are not only important in early childhood, but also in adolescence, another critical stage in skill formation. The ability of individuals and households to modify their environment is limited, and therefore the role of the State is central (Berniell et al., 2016).

Increasing quality and relevance in basic education

Latin America and the Caribbean has made significant progress in basic education coverage. Primary education has been universalized in much of the region and secondary coverage has increased considerably (figure 6.A). Improving secondary education completion rates remains a pending challenge. However, beyond coverage, one of the most critical problems that has emerged is the quality and relevance of curricula in relation to the skills demanded in labor markets.

Students in Latin America and the Caribbean are not reaching basic levels in key areas such as language and mathematics. The PISA standardized tests show low performance in all Latin American and Caribbean countries, in addition to the marked gap by socioeconomic level (figure 6.B), which is a product of both the impact of the family environment and the quality of education. School segregation in Latin America and the Caribbean based on socioeconomic characteristics is extremely high, as documented in RED 2022 (De la Mata et al., 2022). This segregation is evident in the division between public and private education, which generates disparities in quality and limits interaction between groups from different socioeconomic backgrounds, perpetuating inequalities and reducing social cohesion.

Addressing these challenges requires policies that enhance teacher quality through continuous training programs and greater incentives, especially in the public sector, where the most vulnerable students are concentrated. Improving teacher education can be enhanced with several promising strategies, such as focusing on fundamental areas (mathematics and reading comprehension), the implementation of small group tutoring and the use of technologies for adaptive learning, which allows teaching at student rank, and not only at curriculum level (Berniell et al., 2021). 

It is also necessary to invest in school infrastructure, particularly in the most disadvantaged areas, and to update school curricula to develop both basic skills and competencies that respond to the changing demands of the labor market (box 3.2.). Finally, it is essential to actively monitor and address school segregation, promoting inclusive education that provides all students, regardless of their socioeconomic background, with equal opportunities to achieve quality education.

We are all going to have to be digitally literate […] I am convinced that, despite so much technology, artificial intelligence and the way it transforms us, what will continue to be totally important in the future, and perhaps even more so, are transversal competencies, because it is really going to be very difficult to keep up with so much technology, and how fast it is going to come out. And within those enduring competencies, I think one of the most important will be learning how to learn.

Based on an interview with Raquel Bernal

Increase access to post-secondary education for vulnerable groups

The countries of the region have made important efforts to expand the supply of higher education by creating new institutions and promoting financing opportunities through scholarships—in some cases including free education—and credits (Ferreyra, 2017). However, major challenges persist for the inclusion of less advantaged groups, for whom reaching higher educational levels remains difficult. Recent data from RED 2022 reveal that only 14 out of every 100 young people born in the 1990s, whose parents did not have a university education, manage to complete higher education. Among those whose parents completed secondary or higher education, the probability is three times higher (46 out of every 100 manage to complete higher education) and the gap continues to widen (figure 3.7). Although part of this inequality is explained by a lower accumulation of previous skills and the failure to complete secondary education, there are other significant barriers, such as financial obstacles, lack of information, limitations in the supply of education and differences in expectations.

There is an urgent need to address this disparity when considering the wage premium associated with higher education in the region. The wage differentials between those with higher education and those who only completed secondary education are wide. On average, in 2022, workers with completed higher education received an hourly wage 100 % higher than workers with only secondary education completed (figure 8). These differences are larger than in OECD countries (Fernández et al., 2024). In some economies such as Brazil, Chile, Colombia and Mexico, this premium exceeds 200 %. In addition, there is a drop in the premium associated with secondary education compared to primary education, suggesting that attaining this level of education alone may not be sufficient to guarantee higher quality job opportunities.

Policies to improve access to postsecondary education must break down both financial and non-financial barriers. Comprehensive policies that recognize the interconnectedness of factors that influence access and success in higher education are essential. Moreover, given the heterogeneity of education systems and socioeconomic contexts in Latin America and the Caribbean, it is essential that these interventions be tailored to local realities.

On the supply side, the strategic expansion of public institutions and short-cycle programs—such as technological, technical or certifications—has shown potential to increase enrollment, especially in geographically underserved areas (Ferreyra, 2017). ). In Uruguay, the expansion of university campuses increased enrollment and the proportion of first-generation graduates (Lavy et al., 2024). Short-cycle programs in higher education are relatively scarce in our region (Ferreyra et al., 2021). An exception is Colombia, where approximately 30 % of higher education enrollment corresponds to this type of program, which has shown positive returns in income and formal employment, especially for women, although negative for men (Ferreyra et al., 2022).

Another path [for access to post-secondary education] could be to provide students with different paths to professional education: technical, technological, flexible short-cycle learning or certification of competencies, so that people can build a competency profile with the financial capacity they have at that moment.

It is also very important that top-grade universities are present in the territories […] In the digital era, these high-quality universities will be able to offer content if the countries guarantee superior connectivity, even if they are not physically located in all parts of the country.

Based on an interview with Raquel Bernal

It is also crucial to strengthen quality assurance systems in conjunction with policies that disseminate information on the performance of graduates in the labor market, according to the institution and the degree obtained, to guide students’ decisions. These policies could help reverse phenomena such as those documented in Chile and Colombia, where the strong expansion of postsecondary education has not always been accompanied by increases in individual returns on this investment. A significant proportion of graduates could be facing negative returns (González-Velosa et al., 2015). This problem is particularly acute in higher technical degrees, which are often accessible to the most disadvantaged students.

College coverage was expanded without much care for quality. And this increased coverage without quality is very dangerous because we are not fulfilling the promise to these young people. Later, they are going to graduate, they are not going to find jobs or the salaries they expected and I think that this great frustration is very worrying for democracies.

Based on an interview with Raquel Bernal

Before thinking about education and human capital policies, Latin American countries have a serious problem and a lack of clarity in the productive projects of the country we are looking for.

Based on an interview with Raquel Bernal

On the demand side, need- and merit-based scholarships, as well as educational loans with favorable conditions, can significantly increase access and retention in higher education. The Ser Pilo Paga program in Colombia is a successful example of how a comprehensive financing approach can improve enrollment in high-quality universities, with positive effects on graduation, learning and employability (Londoño-Vélez et al., 2020, 2023). 

Regarding credit, financing mechanisms must consider the risks faced by low-income families and the volatility of the labor market. It must be ensured that debt levels are sustainable, given the structural conditions of the region. In recent decades, most countries have developed a variety of student loan programs aimed at assisting low-income students with tuition, but, with some exceptions, little is known about their coverage and sustainability (Espinoza, 2013).

Financing is the great challenge for access and impact of higher education in Latin America and the world. […] What has typically worked in other countries is the income-contingent payment, that is, the student is trained for free and repays when he/she already has a job. […] Financing funds should be established for higher education with contributions from all sectors.

Based on an interview with Raquel Bernal

Recent literature also highlights the importance of addressing non-financial barriers. Informative interventions about the benefits of higher education, admissions processes and financing options can increase aspirations and enrollment in a cost-effective manner (Dinkelman and Martínez, 2014).

Addressing regional and racial/ethnic divides

Social inclusion policies, especially those focused on human capital formation, must address the ethnic-racial gaps that have often been neglected due to the lack of information to identify these populations (Albina et al., 2024). Afro-descendant and indigenous communities show systematically lower educational achievement in most countries in the region (figure 3.9.A). In this case, affirmative action policies, such as those for access to higher education and academic and socioemotional support programs, have shown promising results. In Brazil, quotas for university entrance for students from public schools and underrepresented ethnic groups have had positive impacts (Estevan et al., 2019; Oliveira et al., 2024). Despite possible initial mismatches due to lack of preparation (Arcidiacono et al., 2012, 2016), beneficiaries manage to graduate at approximately the same rate as their non-beneficiary peers (Oliveira et al., 2024). In turn, quotas at an elite university in Brazil generated a modest increase in early career earnings, but these effects faded over time (Machado et al., 2023), demonstrating that these policies require evaluation and adjustment to maximize their impact.

Geographic location is another key determinant of human capital formation opportunities in the region (De la Mata et al., 2022).). The urban-rural divide is the clearest manifestation of regional gaps, with rural areas facing greater challenges in terms of access to quality education and basic services. But the gaps are even wider between different urban areas within countries. For example, there is considerable geographic variation in the percentage of people completing at least secondary education (figure 3.9. B). From the breakdown of this variation, 54 % is attributed to differences within countries and 46 % to differences between countries (Berniell et al., 2024). Factors such as limited educational supply and the restrictions faced by families to invest in education in areas of low economic development explain this dispersion. It is therefore essential that inclusion policies adopt a territorial approach, recognizing and addressing the particularities of each region.

Figure 3.9 Ethnic-racial and regional gaps

A. Differences in the probability of having completed high school, by country and ethnicity, with respect to mestizo/white

B. Percentage of individuals who completed at least secondary education in subnational geographic units of Latin American and Caribbean countries (persons born between 1980 and 1989