4.1 Introduction Human capital theory posits the dynamic process of skill development, where academic skills not only reinforce themselves but also cross-fertilize with one another (e.g., Cunha & Heckman, 2007). For instance, math skills are based on logical reasoning, which can help to build logical arguments in language. In contrast, strong language skills can aid in the comprehension and construction of logical arguments in mathematical contexts. Empirical evidence on the interplay between academic skills, however, is scarce. In addition, existing evidence often fails to isolate reciprocal effects (e.g., whether improved math skills boost reading skills and vice versa) and does not account for unobserved heterogeneity. A better understanding of how different academic skills interact provides opportunities to enhance educational policies. This chapter investigates the interplay between reading, spelling, and math skills of primary school-aged children.1 For this purpose, we use data on skill proficiency of 17,358 Dutch primary school students in grades one to six, collected semi-annually between 2014 and 2021. First, we use fixed-effect regressions to investigate the contemporaneous relationship between skills, accounting for unobserved heterogeneity. Second, we use a panel vector autoregression (panel VAR) approach to analyze the dynamics between varying skills. The approach analyzes interdependencies between multiple time series variables across different individuals within a panel data structure. We derive Impulse Response Functions (IRFs) to examine the response to 1The reading test assesses reading comprehension. We use reading and reading comprehension interchangeably in this chapter. 79
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