UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE IMPACT OF HUMAN CAPITAL AND SOCIAL CAPITAL ON INCOME OF UNIVERSITY GRADUATE IN HCM CITY BY NGUYỄN LIÊN HỒNG PHÚC MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, JULY 2013 123doc UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE IMPACT OF HUMAN CAPITAL AND SOCIAL CAPITAL ON INCOME OF UNIVERSITY GRADUATE IN HCM CITY A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYỄN LIÊN HỒNG PHÚC Academic Supervisor: NGUYỄN VĂN PHƯƠNG HO CHI MINH CITY, JULY 2013 123doc Contents ACKNOWLEDGEMENT. iv CHAPTER 1: INTRODUCTION:. 3 CHAPTER 2: LITERATURE REVIEW .1 Social capital and status attainment theory.2 Human capital and status attainment theory .3 Measurement of human capital .4 Measurement of social capital .5 Relationship between human capital and social capital. 17 CHAPTER THREE: METHODOLOGY .3 The empirical model.
21 CHAPTER FOUR: DATA ANALYSIS AND RESULTS .3 Explanation of coefficients. 43 CHAPTER 5 CONCLUSIONS AND RECOMMENTDATION. 48 Appendix 1: Correlation matrices. 59 Appendix 2: Heteroskedasticity Test: (Breusch-Pagan-Godfrey).
60 Appendix 3: Normality Test. 61 Appendix 4: Regression result. 62 Appendix 5: Regression result of continuous dependent variable. 63 Appendix 6: KMO and Bartlett's Test (Social capital).
64 Appendix 7: Anti-image Matrices. 65 Appendix 8: Extracting the Factors. 67 Appendix 9: Giving the factors meaning. 68 Appendix 10: Obtaining the factor score coefficient matrix.
69 Appendix 11: Obtaining standardized scores. 70 Appendix 12: Regression result (CFA method for social capital). 72 ii 123doc ACKNOWLEDGEMENT First and foremost, I would like to thank my academic supervisor Dr Nguyễn Văn Phương at Vietnam National University HCMC International University for the support, the ideas and constructive comments that helped me a lot to successfully finish this master thesis. I also would like to thank Dr Phạm Khánh Nam and Dr.
Nguyễn Hữu Dũng for supporting during Thesis Research Design and encouragement. I also am deeply grateful to my family for their love, support, encouragement and trust in me during the time of thesis processing. iii 123doc ABTRACT My study investigates the effects of human capital and social capital on income of university’s graduate in Ho Chi Minh City. Human capital is captured by English proficiency, computer skills, and communication skills.
Social capital is categorized by home-based capital, friend connection, extracurricular activities, peer relationship, teacher-student relationship, and university impact. My study employs the data through the own survey in 2012. The empirical results are as follow: i) The English proficiency and communication skills have the significant impact on income of university’s graduate. ii) The parent education and teacher- student relationship also have the significant positive effect on income of university graduate.
The message from my study can give to students, educators, and educational policy makers about the effect of social capital, and human capital on income. iv 123doc CHAPTER 1: INTRODUCTION: 1.1 Problem Statement There are many studies about human capital and social capital alone on different status attainments such as economics, education, environmental, and many other things with different levels of impact on individual, firm, organization, and society instead of the combination between them. Many researchers argue that the relationship between human capital and social capital are substitution (Piazza-Georgi 2002). The other side argues that it has the complementary relationship (Bruderl and Preisendorfer 1998).
In the current market economy in Vietnam, education is the driven factor to increase knowledge and competency. Human capital is the key factor to increase value such as wages, competencies, and productivity not only for individual but also for firm and society as a whole (Denison, 1962; Schultz, 1961). The study of Grayson in 2004 found that human capital had the positive contribution to income of university graduate in Canada. Government has recently attracted many multi-nation companies to invest in Vietnam so the demand of economy is increasing the demand for employee with a certain form human capital to meet the requirements of the competitive business environment.
'The knowledge, skills and competencies and other attributes embodied in individuals that are relevant to economic activity' is the definition of human capital (OECD, 1998). With the context of my study, the human capital is captured by English proficiency, computer skills, and communication skills (Santarelli and Hien, 2012). 1 123doc On the other hand, many studies investigate the effect of social capital on the many desirable outcomes of individual, household, and firm level. The study of Yandan Wang examined the effect of social capital on job outcome of university graduate by using the NELS – National Education Longitudinal Study in 2008.
The study emphasized how importance of the university environment to build up the social capital that had the positive relationship with job outcome for university graduates. The study carried out by Nguyen Van Ha to see the impact of social capital on the household welfare in paper-recycling craft village in Vietnam in 2004. The other study of Ha Anh Tuan carried out to examine the impact of social capital on individual income in Ho Chi Minh City. We rarely see many researches to combine the human capital and social capital impact on one desirable outcome, especially for the level of individual.2 Research Objective With the above in mind, I am going to investigate the impact of combination between human capital and social capital on the income of university graduate in Ho Chi Minh City.
In the transition period of university graduate, the family and school (Yadan Wang, 2008) generate the social network. Human capital accumulates through learning during university period. The message from my study can give to students, educators, and educational policy makers about the effect of social capital, and human capital on income.3 Research Question The major relationships investigated in this study are: Research question 1: Does the investment of individual for the human capital bring the positive relationship to income? 2 123doc Research question 2: Does the current social capital and cumulative social capital during university period have the positive impact on income of university graduate in Ho Chi Minh City? 1.4 Research Methodology My study uses the survey data of university graduate in Ho Chi Minh City with the samples size is 252. The combinations of three method of survey are face-to- face interview, drop off, and email.
The econometric method employed is OLS (Ordinary Least Square) with robust standard errors. The major independent variables in the proposed model are cumulative social capital during university (extra-curricular activity, voluntary service work, and social connection), current social capital, and Home base social capital represented by Social Economic Status (parent education level); Human capitals which measured by English skills, communication skills, and computer skills. The result of this study aims many readers. First, student can use this as a preference for good preparation for the transition period.
Second, educators and educational policy makers can use this to have the good design program for student during university to achieve the desirable human and social capital. 3 123doc CHAPTER 2: LITERATURE REVIEW Before carrying out the study, we have to know that what the definition of social capital, human capital is. How is the relationship between human capital and social capital? What is the theory behind that? In particularly, we have to answer the question what the definition of social capital and human capital is in the context of this study, and how we can measure it.1 Social capital and status attainment theory Bourdieu (1986) defines social capital as “the aggregate of the actual or potential resources which are linked to possessions of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition.” He focused on the social capital with relationships such as family, schooling, and workplace environment. He states that social capital involves “transforming contingent relations, such as those of neighborhood, the workplace, or even kinship, into relationships that are at once necessary and elective, implying durable obligations subjectively felt (feelings of gratitude, respect, friendship, etc.
Three form of social capital are obligations and expectations, relational networks, and social trust and norms (Coleman, 1990). The social capital can help individual to obtain their objective and mission through the social relationship and network of social tie. The study of Coleman, which carried out in 1988 to examined the relationship between the social capital and education achievement by using the series of National Educational Longitudinal Study. He refers social capital to social relationships that can help individual to accomplish a task or 4 123doc achieve a goal.
Social capital can contribute and promote the learning of individual and adapt to society and its norms. Putman (2000) defines social capital “While physical capital refers to physical objects and human capital refers to properties of individuals, social capital refers to connections among individuals - social networks and the norms of reciprocity and trustworthiness that arise from them”. According to Putman, There are two type of social capital. First, bonding social capital refers to inward relationship such as within family, group of friend, or ethnic group.
Second, Bridging social capital relates to outward relationship among different groups. Most of the studies have focused on how human capital impact on the job attaining process. Because the status attainment theory believes that, the education achievement such as knowledge and skills is the core factors to have the competitive advantage to obtain and get a better job (Becker, 1975; Mincer, 1974). Status attainment theory states that the level of education achieved of one person affected by social status of parent.
According to Featherman & Carter (1976) and Jencks (1979), the status attainment theory has a high correlation with parent's occupations, levels of education, and incomes. The level of education in turn affects the occupation status and income of children. There are not many researches and literature mention about the effect of cumulative social capital during university period to income. The connection, extra-curricular activity, and other activity that created during university period play an important role in occupational status of individual.
The social capital that created during university might affect occupation of individual in many ways. Student might get the first job through connection or university network, and this 5 123doc job may be a direction for occupation career of individual, which might directly affect income. On the other side, the argument of Buerkle and Guseva (2002) said that the cumulated social capital during university had independent effect on income of individual. Buerkle and Guseva (2002) states that the social capital gained in the university has the effect on individual’s income, and this effect varies by individual’s education and experience levels.
The reason that social capital in university is of special interest for occupational success is that it is closely tailored to the student’s career interests and aspirations. Conceptualizing the university experience is an important source of social capital. Lin (1999) carried out the research to examine the relationship between social capital and status attainment. The research had two processes.
The first process focused on how people access to social capital available in a general social networks, such as a person’s education background, prior experiences. The second process involved the use of social contact and resources provided by the contact in the job-search process such as network resources, education, and initial position. These factors expected to affect attained status like occupational status, earnings … 2.2 Human capital and status attainment theory With the challenges of the current knowledge economy, many countries in general and individual always want to seek the new way to improve and maintain competitive advantages. In the context of Viet Nam, the success of individual largely depends on level of competencies.
In the end, people are becoming valuable assets and recognized within a framework of human capital.