Luận văn thạc sĩ UEH effect of public transfer on labor supply decision of households in vietnam

UNIVERSITY OF ECONOMICS

HO CHI MINH CITY

VIETNAM

INSTITUTE OF SOCIAL STUDIES

THE HAGUE

THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

--------------------

EFFECT OF PUBLIC TRANSFER

ON LABOR SUPPLY DECISION OF HOUSEHOLDS

IN VIETNAM

BY

NGUYỄN THỊ THANH HẰNG

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, NOVEMBER 2014

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UNIVERSITY OF ECONOMICS

HO CHI MINH CITY

VIETNAM

INSTITUTE OF SOCIAL STUDIES

THE HAGUE

THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

--------------------

EFFECT OF PUBLIC TRANSFER

ON LABOR SUPPLY DECISION OF HOUSEHOLDS

IN VIETNAM

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

BY

NGUYỄN THỊ THANH HẰNG

Academic Supervisor:

DR. TRƯƠNG ĐĂNG THỤY

Ho Chi Minh City, November, 2014

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i

DECLARATION

This is to certify that the thesis entitle “Effect of public transfer on labor supply decisions

of rural households in Vietnam”, which is submitted by me in partial fulfillment of the

requirement for the degree of Master of Art in Development Economic to Vietnam – The

Netherlands Programme. The thesis comprises only my original work and due

supervision and acknowledgement have been made in the text to all materials used.

Nguyễn Thị Thanh Hằng

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ii

ACKNOWLEDGEMENT

I would like to express my sincere appreciation to following persons without whom this

thesis could not be finished.

My supervisor, Dr. Trương Đăng Thụy, whose detailed and useful guidance, comments

and advises have enabled me to go through my research question formation, data mining

and thesis writing up. Particularly, for his necessary push-ups, encouragements and

patience during my writing process, I am indebted.

All lecturers and instructors from Vietnam-Netherlands Programme, for valuable

knowledge and instructions that I have received during the period of my studying here.

My boss and my colleagues, for their supports of sharing my workloads and for their

encouragement.

My friends: Nguyễn Thị Mỹ Hòa, my K18 classmates: Nguyễn Thị Ngọc Linh and

Nguyễn Trường Toan, for their unconditional supports in methodologies, Stata

application and paper formatting and valuable encouragements during my thesis process.

My family: my parents, my parents –in-law, my husband, with my special gratitude, for

all supports, scarification and love that they gave me.

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iii

ABBREVIATION

AFDC Assistance for Dependent Children

AFDC-UP Assistance for Dependent Children-Unemployed Parents

IPSARD Institute of Policy and Strategy of Agriculture and Rural Development

CIEM Central Institute of Economic Management

GSO General Statistics Office of Viet Nam

HIV Acquired Immune Deficiency Syndrome

IFAD International Fund for Agricultural Development

ILSSA Institute of Labor Science and Social Affairs

OLS Ordinary Least Square

OXFARM Oxford Committee for Famine Relief

N.G.O Non-government Organizations

VARHS Vietnam Access to Resources Household Survey

VHLSS Vietnam Households Living Standard Survey

VND Vietnam Dong

WB World Bank

UNDP United Nations Development Program

UNICEF Children’s Right and Emergency Relief Organization

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iv

ABSTRACT

This paper examines the effectiveness of public transfer of poverty alleviation

programs on the labor supply behavior of rural households in Vietnam. The labor supply

decision is analyzed by employing the individual labor supply model on the basis of data

from VARHS. Analysis results show that the public transfer that the farm households

receive in 2008 discourages the working efforts of households’ members in 2010.

Though this effect is negative and statistically significant, its value is quite small with the

marginal effect of public transfer (2008) on labor supply (2010) around 0.0004 to 0.0007

which means for each additional VND 1000 of public transfer that an household receives

would lead to an decrease in number of working days of it members by 0.0004 to

0.0007day per year. And from the results of each laborer in the households, it is

concluded that the transfer the households get in 2008 lead to a reduction of working time

of the households by 4.219 days/year/household and 2.411 days/year/household on

average.

Keywords: public transfer, rural households, individual labor supply model.

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v

CONTENTS

DECLARATION........................................................................................................................i

ACKNOWLEDGEMENT........................................................................................................ii

ABBREVIATION ....................................................................................................................iii

ABSTRACT..............................................................................................................................iv

CONTENTS............................................................................................................................... v

CHAPTER 1 : INTRODUCTION........................................................................................... 1

1.1. Problem Statement ....................................................................................................... 1

1.2. Research objectives...................................................................................................... 4

1.3. Data and Methodology................................................................................................. 5

1.4. Thesis Organization...................................................................................................... 6

CHAPTER 2 :LITERATURE REVIEW AND THEORY BACKGROUND ..................... 7

2.1. Individual Labor Supply Theory.................................................................................. 7

2.2. The Agricultural Household Model ........................................................................... 13

2.3. Unitary and Collective Household Labor Supply Models......................................... 18

2.4. Review of empirical studies....................................................................................... 20

2.4.1. Labor supply behavior ........................................................................................ 20

2.4.2. Factors affecting labor supply decisions............................................................. 24

CHAPTER 3 : METHODOLOGY AND DATA DESCRIPTION..................................... 26

3.1. Specification of the Labor Supply.............................................................................. 26

3.2. Hypothesis Testing..................................................................................................... 30

3.3. Estimation................................................................................................................... 31

3.4. Data description.......................................................................................................... 35

3.4.1. Vietnam Access to Resource Household Survey (VARHS)............................... 35

3.4.2. Sample Description............................................................................................. 37

CHAPTER 4 : ESTIMATION RESULT.............................................................................. 43

4.1. Bivariate Analysis...................................................................................................... 43

4.2. Regression Result....................................................................................................... 49

4.3 Hypothesis testing result ................................................................................................. 55

CHAPTER 5 : CONCLUSION.............................................................................................. 57

REFERENCE.......................................................................................................................... 61

Appendix 1:Correlation matrix of labor supply function’ variables:............................... 67

Appendix 2:Two-stage Estimation results for labor supply function:............................... 68

Appendix 3:Alternative results of labor supply function.................................................... 69

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