UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS DETERMINANTS OF HOUSEHOLD EXPENDITURE ON ENGLISH-LANGUAGE EDUCATION: THE CASE OF HOCHIMINH CITY MASTER OF ARTS IN DEVELOPMENT ECONOMICS By LUU THI KIEU OANH Academic Supervisor Dr. PHAM KHANH NAM HO CHI MINH CITY, 2013 TIEU LUAN MOI download : skknchat@gmail.com CERTIFICATION “I certify that the substance of this thesis has not already been submitted for any degree and has not been currently submitted for any other degree. I certify that to the best of my knowledge and help received in preparing this thesis and all used sources have acknowledged in this dissertation”. LUU THI KIEU OANH Date: … Dec 2013 i TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEGMENTS Firstly, I would like to thank so much to Vietnam – The Netherlands programme for Master of Art in Development Economics where I have been studying useful knowledge.
I would like to express my deep gratitude to my academic supervisor, Dr. Pham Khanh Nam for his great supports, advices and encouragements during my thesis completion. I thank so much for all lecturers because of their valuable supports as well as all my family, my friends because of their helps and encouragements during my study. One again, I am grateful to all of you.
Thank you very much! LUU THI KIEU OANH ii TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT This study attempts to investigate household’s expenditure on English education for primary school children using the surveyed data from 267 randomly collected households in Ho Chi Minh City. As a result, the current payment for English education of household in Ho Chi Minh City plays an important role in total expenditure for education. It takes up 61.4% of basic education in average. Compared with household’s total income and total expenditure, it makes up 4.7% of total income and total expenditure, respectively.
The study also found that total income, total expenditure, current payment for extra education, education level of wife and household own a house has a positive relationship with English education expenditure. Keywords: English education, expenditure, income iii TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS CERTIFICATION. iii LIST OF FIGURES. vi LIST OF TABLES.
viii CHAPTER 1: INTRODUCTION. The structure of the study. 3 CHAPTER 2: LITERATURE REVIEW. 5 Theory of Education expenditure: Education production function.
5 Theory of household production function. 6 Theory of income elasticity of educational expenditure:. 13 CHAPTER 3: RESEARCH METHODOLOGY. Sampling strategy and data collection.
Variables’ measurement and explanation. 23 CHAPTER 4: EMPIRICAL ANALYSIS RESULTS. General information of the Household’s characteristic in HCM City. General information of English education in Vietnam.
Importance of English expenditure in household’s decision. Empirical analysis results. 32 iv TIEU LUAN MOI download : skknchat@gmail. 40 CHAPTER 5: CONCLUSIONS, RECOMMENDATIONS AND LIMITATIONS.
Conclusions and recommendations. 52 v TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 2.1 Analytical framework for the impact explanatory variable on English education expenditure.1 The education level of the parents in Ho Chi Minh City – Author’s survey 2013 .2 The education level of the parents in Ho Chi Minh City – VHLSS 2010 .3 The distribution of current English education expenditure in basic education, total income and total expenditure .4 Histogram graphic of the current payment for English education in Ho Chi Minh City .5 Histogram graphic of the dummy variable of current payment for English education in Ho Chi Minh City .6 Household’s total income distribution in Ho Chi Minh City. 35 vi TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 3.1 Variable description and expected sign for Model 1 .1 The development of number of foreign language center through the years .2 Summary statistic of variables .3 The relationship of total income and current payment for English education .4 The relationship of household’s total expenditure and current payment for English education .5 The results of the models. 40 vii TIEU LUAN MOI download : skknchat@gmail.com ABBREVIATIONS Ageh Age of husband Agew Age of wife Cpe Current payment for English education Cpec Current payment for extra class Eduh Education level of husband Eduw Education level of wife Engh English level of husband Engw English level of wife Genderhh Gender of household’s head MOET Ministry of Education and Training Nrofchildren Number of children Ownh Household own a house Soeh Sector of employment of husband Soew Sector of employment of wife Totalexp Household’s total expenditure Wifeworking Wife is working VHLSS Vietnam Household Living Standard Survey viii TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION 1.
Problem Statements Foreign language currently is a prominent issue in worldwide education and society. With the rapid development of information and communication technologies, through computer systems and networks, people between nations are closer and closer together understand each other through intermediate language that commonly is the English. Most of the knowledge such as books, academic papers, documentation in economy, science and technology, culture and society. are mainly written in English and widely circulated on the global network.
Bolton (2006) likened the English expansion as the most rapid spread language all over the world. In addition, the communication between different languages people through this common language which can understand and move toward the agreed long-term good cooperation. In reality, English is rated as the most used and common speaking language in the world with more than 1,226 million users in 2003 and spread on 75 countries on the world according to Crystal (2003). Graddol (2008) figures that there are more and more people learning English as a second language and it will nearly get big amount of two billions next ten years.
There was also a replacement of English as a school subject instead of Russian from the participation of some Eastern European countries (Modiano, 2006). Since educating English was identified as an important factor indispensable, it should be considered by government investment, according to Nergis, (2011)In some developing countries such as Turkey, they recognize that “the only way to bring Turkish up to the level of the communicational requirements of the modern world is through the interaction of knowledge of English with the derivational convenience provided by the Turkish language reform.” In Vietnam, Thinh (2006) observed that in the past ten years before the joining WTO, the spread of English has facing with an unpredicted speed in Vietnam. The statistics shows that among the foreign language learner, the English learner takes up more than 90% of that volume. While other languages such as Chinese, Japanese, French, 1 TIEU LUAN MOI download : skknchat@gmail.com Korean, and German shares the rest of volume with smaller classes.
There was the emergence of requiring English for job seeking and the overseas studies which impulse over 900,000 learners came to the language centers in Ho Chi Minh city. Moreover, teaching English program was also started at the universities, high schools, government agencies at that period time. After the accession to the WTO accompanied with open policy has attracted a large number of foreign investors to enter the domestic market with small and large projects and the huge investments. To meet the sufficient qualified labor force and ability to work with foreign partners, to communicate and understand the partner is an important issue emerged at the present time.
Therefore, learning language is an urgent issue arises in the context of the integration of the international economic today. Recognizing the need for English language development, many parents are planning for their children a foundation of language, namely English, since they start school. For these reasons, this study is to investigate how important parents see the role of English education by identifying parents’ expenditure on educating English language of their children at starting school age (primary school) in Ho Chi Minh city. Then, it helps to clarify the important role of English language education in general and English in particular for the development of the country which should be concerned and invested by both the individual investor and the government in Vietnam.
Research Objectives General objective: To investigate household’s expenditure on English language education for children at starting school age (primary school) Specific objectives: (1) To identify the importance of English language education in a household’s decision (2) To identify the determinants of household’s expenditure on English education for primary school children in Ho Chi Minh City. 2 TIEU LUAN MOI download : skknchat@gmail. Research Questions In this study, we attempt to answer the question: Do parent’s income, parent working environment, parent’s English level and other demographic issue (age, gender, marital status, location, home ownership and employment status…) impact on the expenditure to English education for their children? If yes, how much does it contribute to? 1. Research methodology This study bases on Pritchett and Filmer (1999)’s theory of education expenditure.
Empirically, it combines both descriptive statistics and regression analysis to analyze the importance of English education and its expenditure determinants. First of all, descriptive statistic is used to analyse the overall view of English education expenditure of the households in Ho Chi Minh City based on their total income, total expenditure and some of the characteristics of the Ho Chi Minh’s household. Second, the ordinary least square (OLS) is employed to figure out the influent factors of English language expenditure on the children at primary school age. Third, the logit regression is applied to investigate whether or not these determinants affect on the household’s decision to spend for their English language education.
Fourth, the ordered logit regression are applied to settle the problem when the dependent variable, in this case is the English education expenditure, is not a continuous but it is ordered. In this study, the answer the expenditure on English is ranked from zero to sixth level which is not equal between these levels. The structure of the study This study is basically divided into five chapters and here is the first chapter of introduction. Following the first chapter, chapter 2 reviews the three theories of the education expenditure, the household production function and the income elasticity of education expenditure.
Some recent empirical researches concerning the expenditure on education in Vietnam and around the world are also employed as the reference in this thesis. Next, chapter 3 is about the research methodology including the way of collecting data, the variables’ explanation and measurement as well as the model specification. The 3 TIEU LUAN MOI download : skknchat@gmail.com chapter 4 will firstly present the overall information of the education in general and the English education in particularly in Ho Chi Minh City. Secondly, we will discuss about the influent factors such as parent’s total income, parent’s total expenditure, parent’s education level and English level, and some of the household’s demographic characteristics which will affect on the English education expense for their children at the primary school age or not? 4 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 2: LITERATURE REVIEW 2.
Theoretical literature In order to comprehend the purpose of this research, we first discuss education expenditure theories. Theory of Education expenditure: Education production function Pritchett and Filmer (1999) present a theory of education expenditure via the education production function. Their theoretical literature shows that a “production function” is an explanation of how much the amount of each input contributes to the amount of output. Then, they apply it into the function of education.
In particularly, the education production function will study the causal effect of school inputs and nonschool inputs on the children outcome. The school inputs, for e. the education level of teachers, the size of class, teacher experience, the tool supports education as textbooks would influence the children achievement score. Whiles, the non-school inputs such as the family’s factors, environmental factors and children congenital ability would also affect the outcome of children.