UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM ERASMUS UNVERSITY ROTTERDAM INSTITUTE OF SOCIAL STUDIES THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE DIRECT AND INDIRECT IMPACT OF CHILD LABOR ON EDUCATIONAL ACHIEVEMENT: EVIDENCE FROM VIETNAM BY NGUYEN TAN PHUC MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, November 2017 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 THE DIRECT AND INDIRECT IMPACT OF CHILD LABOR ON EDUCATIONAL ACHIEVEMENT: EVIDENCE FROM VIETNAM A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYEN TAN PHUC Academic Supervisor: Assoc Prof Nguyen Huu Dung Ph.D HO CHI MINH CITY, November 2017 Contents CHAPTER I: INTRODUCTION Problem statement Research objectives and methods Structure of thesis CHAPTER II: LITERATURE REVIEW Theoretical framework Review of empirical studies CHAPTER III: RESEARCH METHODOLOGY 11 Empirical models 11 The data: Young Lives Round – 2013 15 Data description 16 CHAPTER IV: RESEARCH RESULTS 19 Overview of child labor and education in Vietnam 19 Summarize the data 21 The estimation results for Whole sample 24 Further estimation 26 Results of two – stage least squares regression 29 CHAPTER V: CONCLUSION 32 REFERENCE 35 APPENDICES 38 Abstract This study explores the direct and indirect impact of child work on educational achievement of children at the age from 11 to 20 across rural and urban areas in Vietnam, using the data of Young Lives Round complemented in 2013 Given the characteristics of individual, household and schooling which are controlled in estimation, the results indicate that there is negative relationship between hours worked and math scores of children, but the impact in the rural areas is different from that in the urban In urban, exhaustion while working or doing other activities besides learning is responsible for weak performance in schools Meanwhile, school dropouts and delays because of working is the main reason of low educational outcomes of children in rural Further, schooling attributes contribute to the increase in math scores of children, especially those in rural, raising the necessities of improving qualities of education in those regions This study also uses a set of factors including income earned from crops, household shocks, and community – level rice price as instruments of hours worked variable But after Hausman examination, the Ordinal Least Square (OLS) results are preferred due to weak instruments JEL Classification: I21, J13, J22, O15 Key words: child work, educational achievement, Vietnam CHAPTER I: INTRODUCTION Problem statement Child labor is described as the engagement of children in various activities (paid or unpaid) that keep them from their childhood According to Global Child Labor Trends, there are approximately 10.6 percent of children at the age of – 17 in the world participate in workforce Following the first National Child Labor Survey in 2014, this number in Vietnam is about 9.6 percent Most of them living in the countryside, being involve in agricultural activities or their family businesses over 42 hours per week Consequently, around 96.2 percent of them were not going to school Many argue that working of children would bring many disadvantages for the development of them following reasons One disadvantage concerns the increase in the risks of issues which could harm seriously physical and mental health of children when they participate in workforce It is obviously to see that jobs employing children as workforce normally are described as unskilled types of work, together with poor quality in working conditions The occupational injuries potentially appear from operations with dangerous equipment, heavy loads or poison exposure Moreover, throughout history of the world, child labor often relates to illegal activities such as slavery, drug trade, child prostitution and human trafficking These kinds of abuses cause both physically and mentally traumas for the whole life of children involved According to UNICEF, Sub – Saharan Africa has the highest percentage of young workers around the world At the group of – 14 ages, child labor in this country accounts for 28 percent, while countries such as Middle East and North Africa and East Asia and the Pacific are about 10 percent Following International Labor Organization, using the sample of 26 countries, there is a quarter of children who suffer injuries while working In United States, industries using children as employment force accounts for the higher injury rates than the average level every year In term of Vietnam, according to Hanoi school of Public Health report, about 23000 children were injured by sharp objectives, and half of these children got damaged when they were working Further, more than 60 percent of injuries caused by machines in young workers, mainly at the age of older 14 There was investigation in 2001 conducted by the Ho Chi Minh City Department of Labor, Invalids, and Social Affairs, found that child labor problem still remains at least of 24 districts throughout Vietnam, especially in rural areas More than 90 percent of companies that employ children as workforce without legal license, and children have to work under hazardous conditions, particularly in environments of gold mines, timber operations or cargo transport In addition, the survey implemented by Statistical Information and Monitoring Programme which disentangle the state of child labor in four countries Cambodia, Laos, Mongolia, and Vietnam reports that 43 percent of children aged – 14 and 51 percent of children aged 15 – 17 are suffering dangerous conditions at their work In 2015, The Guardian documented that about 3000 children in Vietnam were trafficked to the UK for working and debt paying purpose, with regard to illegal businesses such as brothels or cannabis farms The second drawback of child employment is to prevent children from their childhood that they should have The fact is, children will miss the opportunity to attend school and to acquire academic education They also have no time playing outside with those at the same age In turn these factors lead to the statement that children are limited for developing fully their understandings, awareness and knowledge Education plays a vital role for the long – term growth of people, especially children It is believed that, living in a competitive world, candidates with a high education and knowledge will have more choices in labor market than others The reason for this could be explained that children acquire from basic to advanced level of accumulated understandings of a field through learning From that, they will be able to have a general perspective for any situations, circumstances, and abilities Knowledge also helps them avoid faults and build on achievements from the past Moreover, spending more time in school improves their soft skills as well, including responsibility, time management, disciplines, organizational and social skills These strengths contribute significantly to their success and quality of life in future In term of country level, education is described as a main tool for sustainability, economic development and social welfare One of the prior goals of both developed and developing nations in the world is to improve the total capacity and quality of their human resources from their own country or from others Every year, they invest large amount of money in human capital as well as enhance the awareness of residents about benefits of acquiring knowledge Educational achievement is considered as the instructional goals or learning objectives of education It is described as outcomes that an individual obtains from learning activities in academic institutions, such as in schools, colleges, universities, etc Students reveal educational performance by their ability of knowledge, understanding and skills acquisitions in a particular field (numeracy, literacy, science, art, computing, etc.) through distinct measurements like scores or grades on tests, level of academic degrees, and number of educational certificates Educational achievement is normally employed to measure ability of one person It shows the outcome that an individual obtains from his or her engagement of education, focusing on what he or she could actually do, rather than the level of participation in education Educational achievement also helps to setting standardized assessments for distinguishing capacities of students in schools, contributing to household decisions whether a child should continue education or not, as well as enhancing the motivation of education engagement of children Research objectives and methods This study mainly aims to investigate the direct and indirect effect of child labor on educational achievement which measured by the cognitive achievement such as mathematics performance for children in Vietnam The exploration from this research could solve some following problems At first, educational achievement (or educational performance) is seen as one of important factor which highly influence long – term development as well as enhance the quality of life of an individual, household, society or even a country Therefore, it is necessary and reasonable for exploring the effect of a historical and prevalent problem like employment of children at work, on their educational achievement Second, previous studies primarily concentrate on school attendance or school enrollment, and use this measurement as the indicators of learning achievement However, this approach is unable to estimate truly the harmful which is caused by child labor For example, working could harm potential achievement or gains acquired from education even attaining school or not According to Christopher (2000), it could over – estimate the effect of working at the early age in case children enroll in poor education or school, but they can improve their knowledge through their job Besides, it also would under – estimate the child labor due to the scenario in which student in spite of going to school but having no time learning or completing homework after working Consequently, it is obviously necessary to employ other indicators for educational achievement than simply using school enrollment rates Unlike previous studies, this study employs new measurement of learning achievement, the mathematics performance of children Third, by employing rich set of control variable, including individual characteristics, household characteristics, and schooling characteristics, the results suggest which factor of an individual could potentially affect educational achievement, together with child work For example, it is considered that older children are likely to outperform younger children in term of both working and learning achievement due to their higher physical health As a result, the intensity of work will not affect performance of older children as much in comparison to younger ones Finally, it will show the general picture as well as support the factual evidence about consequences of using children as labor force and its effect (both direct and indirect) on human growth and learning, of one typical developing country like Vietnam These results will help policy makers in taking child labor into consideration, then building appropriate and effective policies, also contribute to academic field of employment of children at work as well as learning achievement for later related studies Following this research objective, the chosen empirical method in this study is based on the model set by Heady (2000), using the Young Lives Round data in Vietnam which covers 839 children at the age from 11 to 20 In which, the total effect is measured when regressing educational achievement on child labor while excluding schooling attributes out of estimated equations, given the control of individual characteristics and household characteristics of children The direct effect, however, is exposed in the same analysis but keep the schooling attributes constant The estimations in this study are Ordinal Least Square (OLS) and Two – stage Least Square with a set of instrumental variables for robustness check In my expectation, weak performance in education is driven by the incidence of child work, and this negative impact is different across urban and rural areas Structure of thesis This study is divided into five main sectors followed: The literature review related to the research problems and methodologies will be shown in section II Section III describes the theory, chosen empirical model, data sample and data requirements used in this study, plus the suggestion of potential problems and solutions Section IV reports the results of regressions as well as tests Finally, section V conclude some remarks, including main findings, policy implications and limitations appeared in this study CHAPTER II: LITERATURE REVIEW This chapter provide the theoretical framework about the decision in whether children take part in labor force or continue their education is made within household as well as the correlation between child work and educational achievement of children After that, some related studies and researches are discussed for the purpose of further understandings about this academic field Theoretical framework Following the definition of ILO, child labor is “work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development” (ILO 2004, p.16) Heady (2000) described child labor as paid or unpaid activities which provided on the labor market as well as on household farms or companies This approach of description of child work excludes the domestic works in the households (including taking care of ill members or younger children, cleaning, washing, cooking, etc) He employed a group of questions to ask children about their economic activities for measuring the intensity of child work, such as whether a child had worked in the past twelve months, how many weeks and how many hours per week they had worked in the past twelve months Mavrokonstantis (2011) pointed out that child labor should be considered as the economic works, including paid activities outside the household and unpaid activities inside the household The educational achievement of a child is the indicator of the school output of one individual, which is derived from an educational production function, given the student inputs An educational production function is determined as follows: E = f (X1, X2, X3) (1) Where E represents the school output of a student, in other says, the educational achievement of a student X1 includes factors around the school environment, such as the teaching methods and materials, the school infrastructures, the length of time that student use for schooling X2 comprises the environmental influences on education outside the school, like educational backgrounds of parents, or motivation for education of a student X3 represents factors which measure the initial level oriented towards learning of student The intensity of child labor, which is measured by the time allocated on economic works, theoretically affect educational achievement following numerous ways On the one hand, child labor will reduce educational outcome of a child due to the fact that time allocation is scarce resource, thus the increase in hours worked will lead to the decrease in input factors of educational production function, such as hours spent on attending schools or extra classes, and hours spent on accomplishing homework Additionally, working could cause exhaustion, lack of energy and ability to learn academic knowledge On the other hand, child labor is considered to enhance the educational performance of children by allowing them to apply academic knowledge they have learnt at school in real life More than this, working could provide children not only specific experiences related to jobs, but also a number of soft skills such as time management, responsibility, communication, confidence, problem solving, etc In turn, these elements will help to increase the educational outcome of children in their schools Alternatively, child labor could have no effect on educational achievement if the incidence of child work is substantial low, or if children know how to arrange efficiently their time between schooling and working Educational achievement (or academic performance) is the short or long – term educational goals that one individual has obtained from their engagement of education Obviously, the level of educational performance of a child could highly determine his or her future income as well as living conditions, rather than his or her years of schooling Educational achievement is normally measured through scores from examinations or tests of cognitive skills, including verbal skills and mathematics skills For example, Heady (2000) employed results from an easy reading test, an easy mathematics test, an advanced reading test, and an advanced mathematics test in his survey as the measurement of educational achievement of children in Ghana Gunnarsson et al (2006), similarly, used the mathematics and language test scores of children on third and fourth year primary schools in nine Latin American countries Bezerra et al (2009) employed the school achievement tests in Portuguese and mathematics for students in Brazil Review of empirical studies 44 Table continued Schooling costs (million VND) 0.086** -0.003 0.071 -0.028 -0.001 -0.031 (0.04) (0.01) (0.05) (0.03) (0.00) (0.03) Income from crops (million VND) Household shocks Community - level rice price (thousands VND) Constant 47.780*** (14.92) 449 0.318 11.139*** -0.004** -0.014 (0.00) -0.281 (0.23) (0.01) 0.371* (0.21) -0.276** 0.131 (0.11) -8.028*** (2.30) 449 0.739 3.461** (0.09) -12.221*** (2.59) 390 0.769 2.214* 11.038 41.030** -8.885 (27.58) (17.48) (41.50) Observations 449 390 390 R2 0.075 0.335 0.091 F test 155.65*** 10.364*** 140.65*** Hausman test 2.850 1.870 Instrumental variables include: the income from crops (million VND), the household shocks, and the community - level rice price (thousands VND) Note: Values in parentheses represent standard errors *** significance at the 1% level ** significance at the 5% level * significance at the 10% level 45 Stata commands and results set more off encode (region), gen(re1) gen consump = ln(food) replace schoolcharge = schoolcharge/1000 replace revenue = revenue/1000 *Descriptive statistics ** whole sample sum ppvt age gender bmi domestictask siblings farmingwork workoutside work consump hq sv householdsize area bn.re1 educationyear1 parent3 motivation schoolcharge maths_perco revenue event price agri Variable Obs Mean ppvt age gender bmi domestictask 839 839 839 839 839 99.35638 184.6698 5029797 18.75956 1.12503 siblings farmingwork workoutside work consump 839 839 839 839 839 hq sv households~e area Std Dev Min Max 46.84008 41.5546 5002894 3.068711 1.041739 135 11.90476 173 243 31.60184 1.326579 8158522 2.705483 3.521335 6.895039 9650932 2.062941 3.984135 4.269298 8784606 0 0 2.995732 16 14 16 9.116579 839 839 839 839 6289768 7213945 5.252682 4648391 117613 2453347 2.12341 4990597 0 1 16 re1 839 102503 3034895 839 839 839 0619785 29559 5399285 2412604 4565797 4987005 0 1 educationy~1 parent3 839 839 8.307509 8.971395 2.914179 3.366498 13 17 motivation schoolcharge maths_perco revenue event 839 839 839 839 839 3.807986 12.94982 47.61972 11.44856 5244338 4709604 22.59916 17.49225 41.89922 4997005 2.941176 0 169.288 92.85714 600 price 839 11.57211 1.29594 14 ** rural area sum ppvt age gender bmi domestictask siblings farmingwork workoutside work consump hq sv householdsize area bn.re1 educationyear1 parent3 motivation schoolcharge maths_perco revenue event price if area == 46 Variable Obs Mean ppvt age gender bmi domestictask 449 449 449 449 449 111.4722 197.0713 4988864 18.45214 1.3902 siblings farmingwork workoutside work consump 449 449 449 449 449 hq sv households~e area Std Dev Min Max 45.77916 40.41823 5005565 2.715365 1.053562 18 139 12.71346 172 240 31.60184 1.231626 1.069042 3.522717 4.591759 6.456825 8938167 2.315688 4.184983 4.317701 7468751 0 0 2.995732 16 14 16 8.244071 449 449 449 449 6498378 5534521 4.674833 1376617 1812478 1.60949 0 1 13 re1 449 1848552 3886131 449 449 449 1091314 5300668 1759465 3121518 4996519 3811994 0 1 educationy~1 parent3 449 449 8.966592 8.334076 2.860015 3.116019 13 14 motivation schoolcharge maths_perco revenue event 449 449 449 449 449 3.757906 8.024294 45.54098 20.01087 4944321 4627278 18.96248 17.98293 54.97131 5005267 3.571429 0 169.288 92.85714 600 price 449 11.10468 1.192031 13 ** urban area sum ppvt age gender bmi domestictask siblings farmingwork workoutside work consump hq sv householdsize area bn.re1 educationyear1 parent3 motivation schoolcharge maths_perco revenue event price if area == 47 Variable Obs Mean ppvt age gender bmi domestictask 390 390 390 390 390 85.40769 170.3923 5076923 19.11348 8197436 siblings farmingwork workoutside work consump 390 390 390 390 390 hq sv households~e area Std Dev Min Max 44.13954 38.16562 500583 3.400043 9406801 135 11.90476 173 243 29.64636 1.435897 524359 1.764615 2.288974 7.399547 1.031506 1.683138 3.516553 3.866514 7369887 0 0 3.951244 12 14 15 9.116579 390 390 390 390 6049599 9147436 5.917949 0830277 1476267 2.429137 0666667 25 1 9833333 16 re1 390 0076923 08748 390 390 390 0076923 025641 9589744 08748 1582649 1986043 0 1 educationy~1 parent3 390 390 7.548718 9.705128 2.7921 3.496267 13 17 motivation schoolcharge maths_perco revenue event 390 390 390 390 390 3.865641 18.62049 50.01293 1.590923 5589744 4743405 25.01728 16.6129 10.93856 4971476 2.25 2.941176 0 159.37 88.23529 142 price 390 12.11026 1.19957 14 *OLS estimation **whole sample eststo: reg maths_perco work ppvt age gender bmi domestictask i.re1 consump area hq sv householdsize siblings eststo: reg maths_perco work ppvt age gender bmi domestictask i.re1 consump area hq sv householdsize siblings educationyear1 parent3 motivation schoolcharge eststo: reg maths_perco ppvt age gender bmi domestictask i.re1 consump area hq sv householdsize siblings educationyear1 parent3 motivation schoolcharge esttab, b(3) se(2) r2 scalars(F) star(* 0.1 ** 0.05 *** 0.01) 48 (1) maths_perco (2) maths_perco (3) maths_perco work -1.006*** (0.26) -0.723*** (0.24) ppvt 0.337*** (0.04) 0.231*** (0.04) 0.223*** (0.04) age -0.325*** (0.05) -0.425*** (0.05) -0.487*** (0.04) gender 1.017 (1.09) -0.382 (1.04) -0.508 (1.05) bmi 0.352* (0.20) 0.313 (0.19) 0.316 (0.19) domestictask 0.044 (0.56) 0.066 (0.53) 0.392 (0.52) 1.re1 0.000 (.) 0.000 (.) 0.000 (.) 2.re1 -0.863 (2.85) 0.645 (2.69) 1.474 (2.69) 3.re1 4.439** (2.21) 4.409** (2.09) 4.927** (2.10) 4.re1 -0.161 (2.47) 1.073 (2.33) 1.647 (2.34) consump 2.781*** (0.85) 2.053** (0.82) 2.190*** (0.82) area -1.737 (2.13) -1.356 (2.02) -1.614 (2.03) hq 6.757 (4.83) 4.160 (4.57) 3.722 (4.59) sv 12.170*** (3.48) 6.076* (3.38) 6.432* (3.39) households~e -0.488 (0.32) -0.167 (0.31) -0.158 (0.31) siblings -0.307 (0.66) -0.646 (0.62) -0.657 (0.62) educationy~1 3.221*** (0.37) 3.338*** (0.36) parent3 0.582*** (0.17) 0.586*** (0.18) motivation 1.029 (1.13) 1.028 (1.14) schoolcharge 0.018 (0.02) 0.019 (0.02) _cons N R-sq F 41.043*** (10.02) 839 0.215 14.984 Standard errors in parentheses * p