\ UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THEHUGUE VIETNAM THE NETHERLANDS VIETNAM- THE NETHERLANDS PROJECT OF M.A ON DEVELOPMENT ECONOMICS INTERNATIONAL REMITTANCES AND THE EDUCATION OF YOUNG GENERATIONS: THE CASE OF VIETNAM A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS BY r-·-80GIAoot~c8AorJ?.o~· · TRUONG f)~l HQC I<INH TE TP.HCM NGUYEN HAl NGAN HA TIIU VIEN • Academic Supervisor: ) / ~ 3 L-- DR. PETER CALKINS HO CHI MINH CITY, OCTOBER 2009 AN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT I would like to express my sincere gratitude to my supervisor Prof. Peter Calkins for his kind support of my Master study and research from initial to final level, for his patience, enthusiasm, encouragement and immense knowledge. His assistance has helped me a lot during the time of designing and writing this research.
I am heartily thankful to Dr. Nguyen Trang Hoai, Dr. Nguyen Minh Due and Dr. Tran Tien Khai for their comments and evaluation of my initial research proposal.
I also send my gratefulness to Mr. Truong Thanh Vu and Mr. Luong Vinh Quae Duy who help me to deal with VHLSS 2006 dataset and Stata software. Special thanks go to my friends for their support and motivation during my study at the Vietnam -Netherlands Program for M.A in Development Economics.
Last but not the least, I would like to thank my family: my parents for giving birth to me, my parents-in-law, my husband and my older brother for supporting me spiritually throughout my life. Finally, I offer my regards and blessings to all of those who supported me in any respect during the completion of the thesis. AN VAN CHAT LUONG download : add luanvanchat@agmail.co CERTIFICATION I certify that the substance of this thesis has not been submitted for any degree and is not being current submitted for any other degree. I certify that to the best of my knowledge, any help received in preparing this thesis, and all sources used have been acknowledged in this thesis.
NGUYEN HAl NGAN HA Date: 23 October, 2009 ii AN VAN CHAT LUONG download : add luanvanchat@agmail.co ABSTRACT Over the last decades, Vietnam has experienced a sharp increase in international remittances inflows from overseas migrants. The total volume of remittances accounts for approximately 6-8% of GDP. Many Vietnamese people have migrated not only with the hope of getting more income and sending more remittances to support their poor families in hometown, but also with the desire to pay school fee for their young generations. By lifting liquidity constraints, remittances raise the educational attainment of young people left behind in receipt countries.
The impact of remittances on the education of young generations has been studied in many papers. However, this relationship has not been tested empirically in Vietnam. Therefore, the contribution of this paper is to investigate empirical evidences on the link between international remittances and probability of being enrolled in schools of young individuals in Vietnamese households through exploring data of the Vietnam Household Living Standard Survey 2006 by applying Logit econometric model. Our results show that remittance receipts statistically significantly increase the probability of school enrollment, particular for girls and in rural areas.
In addition, this research also finds that the young who have to work tend to gain lower chances to go to schools than their friends without any job. Based on the findings, the author suggests many ways to improve the school enrollment rate of young individuals. Methods aiming at stimulation of remittance income are appropriate such as encouragement of labor exportation programs since Viet Kieu has been getting older and less altruistic as well as lowering cross border money transfer fees. Moreover, when reserved financial budget for young people increases via the effect of attracting more remittance receipts, number of school aged individuals participating in labor market at early ages tends to diminish further.
iii AN VAN CHAT LUONG download : add luanvanchat@agmail.co TABLE OF CONTENTS CHAPTER 1: INTRODUCTION. 6 CHAPTER 2: LITERATURE REVIEW. THE CONCEPT OF INTERNATIONAL MIGRANT REMITTANCES. THEORETICAL FRAMEWORK AND EMPIRICAL STUDIES RELATED TO THE IMPACT OF INTERNATIONAL REMITTANCES ON THE EDUCATION.
THE ANALYTICAL FRAMEWORK. 21 CHAPTER 3: OVERVIEW OF INTERNATIONAL REMITTANCES AND EDUCATIONAL ATTAINMENT OF THE YOUNG IN VIETNAM. OVERVIEW OF INTERNATIONAL REMITTANCES IN VIETNAM. OVERVIEW OF EDUCATION OF THE YOUNG IN VIETNAM.
32 iv AN VAN CHAT LUONG download : add luanvanchat@agmail.co CHAPTER 4: METHODOLOGY. Sampling method and sample size. Description of variables. Descriptive statistics of variables.
STRENGTH AND WEAKNESS OF DATASET. 43 CHAPTER 5: EMPIRICAL ANALYSIS. INTERPRETATION OF THE RESULTS. 45 CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS.
70 v AN VAN CHAT LUONG download : add luanvanchat@agmail.co LIST OF FIGURES Figure 2.1 Home Investments in Young generations .1 Number of exported workers during 1992-2007 .2 Percentage of Vietnamese migrant workers by countries 1992- 2006 .3 Inward remittances from Vietnamese migrants during 2001-2009 .4 Remittances as percentage of GDP during 1999-2008 .5 Uses of international remittances(%) .1 Distribution of independent variable "remittances per capita" .2 Distribution of independent variable "logarithm of remittances per capita" .3 Distribution of independent variable "income excluding remittances per capita" .4 Distribution of independent variable "logarithm of income excluding remittances per capita" .5 Distribution of independent variable "age of young generations" .6 Distribution of independent variable "percentage of school-aged children in the household" .7 Distribution of independent variable "age of household head" .8 Scatter plot of predicted value and standardized Peason residuals .9 Scatter plot of predicted value and deviance residuals .10 Scatter plot of predicted value and leverage .1 Predicted probability of school enrollment by remittances per capita .2 Predicted probabilities of school enrollment by remittances per capita and urban-rural areas .3 Predicted probabilities of school enrollment by remittances per capita and gender .4 Predicted probabilities of school enrollment by remittances per capita and employment status of young generations. 50 vi AN VAN CHAT LUONG download : add luanvanchat@agmail.co LIST OF TABLES Table 3.1 Flow of international remittances by origin(%) .2 Percentage of households receiving international remittances .3 Share of total remittances in urban and rural area .4 Net enrollment rate in year 2006 by urban rural areas and sex .5 Average expense on education and training per person in the past 12 months in year 2006 by expense item, urban rural, sex, age group and type of school .2 Descriptive statistics of independent variables .3 Descriptive statistics of dependent variable "Enrollment status" .4 School enrollment status of young generations by amount of international remittances .5 School enrollment status of young generations by age group .6 School enrollment status of young generations by employment. 7 Description and measurement of variables .8 Logistic regression results of Model I (full) .9 Logistic regression results of Model 2 (restricted) .10 Diagnostic test to compare Model 1 and Model 2 .11 Hosmer and Lemeshow's goodness-of-fit test .12 Diagnostic test for model specification error .13 Diagnostic test for Multicollinearity .14 Logistic regression results of Model 3 (after excluding influential observations) .1 Estimation results of Logit Model .2 Marginal effects of explanatory variables on the probabilities of enrollment. 76 vii AN VAN CHAT LUONG download : add luanvanchat@agmail.co ACRONYMS ECV Encuesta Condiciones de Vida- Quinta Ronda EHPM Encuesta de Hogares de Prop6sitos Multiples- National Household Survey.
EMP Employment status of young generations ENIGH Households Incomes and Expenditures National Survey of Institute of Statistics, Geography and Informatics ENROLL Enrollment status ofyoung generations FDI Foreign Direct Investment GDP Gross Domestic Products GSO General Statistics Office HDI Human Development Index HHAGE Age of household head HHEMP Employment status of household head HHGENDER Gender of household head HHSCHOOL Number of completed school years of household head IMF International Monetary Fund INER PC Income excluding remittances per capita LAMP-DR7 Latin American Migration Project-Dominican Republic Survey LFS South Africa Labor Force Survey LN INER PC Logarithm of income excluding remittances per capita LN RE PC Logarithm of remittances per capita viii AN VAN CHAT LUONG download : add luanvanchat@agmail.co ML Maximum Likelihood MMP107 Mexican Migration Project MOLISA Ministry ofLabor-Invalids and Social Affairs NLSS Nepal Living Standards Survey ODA Official Development Assistant OECD Organization for Economic Cooperation and Development PER SA CHILD Percentage of school-aged children in household PSLSD Project for Statistics on Living Standards and Development RE PC Remittances per capita SBV State Bank ofVietnam UNDP United Nations Development Program USD United States Dollar VHLSS Vietnam Household Living Standard Survey VND Vietnam Dong WB World Bank ix AN VAN CHAT LUONG download : add luanvanchat@agmail.co CHAPTER 1: INTRODUCTION This chapter will present the thesis topic that this study focuses on. The problem statement will be discussed in section 1. Additional contents including research objectives, questions, hypotheses and methodology are presented further in section 1. Finally, research scope is mentioned in section 1.6 and thesis structure will concludes this chapter.
PROBLEM STATEMENT International migrant remittances play a crucial role in developing countries. The huge and growing volume of international migrant remittances is even larger than the ODA amount flowing into developing countries. Most of the remittance inflows come from overseas migrants with the purpose of family support and investment in business or human capital. Remittances may g1ve significant impacts on households especially low-income families.
Remittances may help receipt households to establish or expand their small business (Woodruff & Zenteno, 2007; Amuedo-Dorantes & Pozo, 2006) and to pay for medical expenses (Amuedo-Dorantes et al. In addition, remittance receipts are used as an investment in the education of young generations in remittance receiving families. Vietnam was one of the top recipients of overseas migrant remittances among developing countries in 2008 (WB, 2009). In 2007, average remittances per person were 63 USD, compared with the average for OECD of 108 USD.
Remittance amount accounted for approximately 8% of total GDP and 220% of net ODA receipts. The ratio of remittances to FDI was 0. International remittance inflows reached 7.2 billion USD, accounting for about 6.4% of total GDP in 2008 (Nguyen, 2008). International remittance inflows come from two main sources including temporary exported workers and permanent migrants (Viet Kieu).
While Viet Kieu has become older and less altruistic, number of exported labors will be the main sources of international remittances in AN VAN CHAT LUONG download : add luanvanchat@agmail. Remittances are considered as person-to-person flows that are stable and well targeted to the specific need of each individual recipient. In addition, international remittances are not necessary to be paid back since they seem to be altruistic money transfers. For that reason, policymakers will need much more empirical studies on the use of international remittance inflows since remittances, in fact, positively contribute to communities and hometown nations of abroad migrants.
A large number of Vietnamese households are currently living below the poverty line mainly because of unemployment, low wage and low educational level. One of the ways for poor people gaining higher income is to migrate abroad with the desire to send remittances back home for supporting their families and offering more opportunities for their young children to go to school. During 1985 and 2007, the HDI of VietNam increased by 1. Vietnam has a rank of 116 111 out of 182 countries with data in 2007 (UNDP, 2009).
One of Vietnam's development goals is to push up its recent low ranking on HDI. by improving educational factor in international HDI scale. In Vietnam, education programs are still costly and of low quality. Moreover, national public budget is not enough to support free or low cost education programs for young individuals.
Thus, remittance receipts seem to be one of substitute capital sources for public educational investment rather than a complement. Currently, there are a series of studies examining the impact of remittances on the schooling of young generations in El Salvador (Edwards & Ureta, 2003; Acosta, 2006), in Mexico (Hanson & Woodruff, 2003; Malone, 2007), in Philippines (Yang, 2008), in Dominican Republic (Amueto-Dorantes et al.