International remittances and household welfare in vietnam from VHLSS 2006 to VHLSS 2008

UNIVERSITY OF ECONOMICS

INSTITUTE OF SOCIAL STUDIES

HO CHI MINH CITY

THE HUGE

VIETNAM

THE NETHERLANDS

VIETNAM - NETHERLANDS
PROJECT FOR M.A. IN DEVELOPMENT ECONOMICS

INTERNATIONAL REMITTANCES AND
HOUSEHOLD WELFARE IN VIETNAM
FROM VHLSS 2006 AND VHLSS 2008
“This paper was submitted in partial fulfillment of the requirements for the
Masters of Development Economics (MDE) degree at the
Vietnam - The Netherlands Programme (VNP), August/2012”

BY
NGUYEN VAN PHUC

Ho Chi Minh City, August 2012

1


ABSTRACT

International remittances has more important role in progress of economy and society in
Vietnam. With US$ 9 billions in 2011, Vietnam is one of 10 top countries received the
remittances in the world. This paper examines the impact of international remittances, which
increases over time, on the household welfare of receiving households in Vietnam. The thesis
has combined the propensity score matching and difference-in-differences methods with
panel data taken from Vietnam Household Living Standard Surveys 2006 and 2008. It is
found that international remittances increases income and expenditures for recipients, but the
effect of remittances on expenses of healthcare and education is not statistically significant
although the expenses also rise over time. When studying separately for urban and rural
areas, the thesis found that the impact of international remittance on income and expenditures
are positive and statistically significant for rural areas and positive and insignificant for urban
areas; meanwhile, the paper has not detected the affects of foreign remittances on education
and healthcare in urban or rural areas.

Key words: international remittances, household welfare, household surveys, Vietnam

2


TABLE OF CONTENTS

ABSTRACT................................................................................................................... ........... i
TABLE OF CONTENTS ......................................................................................................... ii

CHAPTER 1: INTRODUCTION............................................................................................. 04
1.1 Problem statement..................................................................................................
1.2 Research objectives ...............................................................................................
1.3 Research question .................................................................................................
1.4 Thesis structure …………………………………………………………………..
CHAPTER 2: LITERATURE REVIEW................................................................................... 08

2.1 The key concepts.....................................................................................................
2.2 Empirical literature..................................................................................................
2.3 Empirical framework...............................................................................................
2.4 Overview of theory on impact evaluation ........................................................
2.5 Summary of PSM and DD methods ......................................................................
2.5.1 Propensity Score Matching (PSM) .....................................................................
2.5.2 Difference-in-difference (DD) ............................................................................
CHAPTER 3: METHODOLOGY AND DATA........................................................................ 22
3.1 The research model.................................................................................................
3.2 Variable introduction..............................................................................................
3.3 Data .…........................................................................................................ ...........
3.4 Estimation Strategy ................................................................................0.445]
-0.204
[0.691]
-0.316
[0.493]

-0.035
0.046
0.064
[0.102]
[0.084]
[0.421]
0.432***
0.465***
0.353***
0.357***
0.190
Reg_7
[0.119]

[0.102]
[0.093]
[0.077]
[0.452]
0.230***
0.311***
0.220***
0.228***
-0.781*
Reg_8
[0.085]
[0.069]
[0.074]
[0.054]
[0.436]
9.674***
9.233***
9.599***
9.468***
-0.862
Constant
[0.274]
[0.105]
[0.223]
[0.188]
[1.038]
498
498
498
498

498
Observations
0.276
0.263
0.310
0.304
0.488
R-squared
Note: (1) Full model, (2) Restricted model. Robust standard errors in parentheses

-0.226
[0.833]
0.155
[0.205]
-0.480
[1.040]
0.994***
[0.266]
1.080***
[0.309]
-0.083***
[0.031]

5.319***
[0.601]
-1.534***
[0.499]
-1.592**
[0.723]
1.798***

[0.490]
5.097***
[0.639]
-0.842*
[0.446]

0.000**
[0.000]

-0.920***
[0.306]

Reg_6

-0.728**
[0.284]
-1.264
[0.818]
498
0.485

Ln_healthcare
(1)
(2)
0.49
[0.489]
0.259*
[0.133]
-0.208
[0.574]

0.159
[0.251]
0.082
[0.201]
-0.007
[0.019]
-0.002
[0.007]
0.050
[0.141]
-0.623
[0.447]
1.685***
[0.356]
0.062
[0.472]
0.264
[0.338]
-0.011
[0.348]
0.213
[0.351]
-0.000
[0.000]
0.000
[0.000]
0.000***
[0.000]
-0.000**
[0.000]

-0.661***
[0.253]
-0.393
[0.297]
-0.749
[0.540]
-0.126
[0.341]

-0.092
[0.276]
-0.269
[0.315]
-0.007
[0.262]
4.725***
[0.689]
498
0.146

0.572
[0.497]
0.276**
[0.132]
-0.244
[0.570]

1.702***
[0.234]

0.000***
[0.000]
-0.000*
[0.000]
-0.450***
[0.150]

4.778***
[0.111]
498
0.122

*** significant at 1% level; ** significant at 5% level; * significant at 10% level)

Source: Author's estimation from panel data of VHLSS 2006-2008

74


Appendix 5.4B Results of DD Regression with PSM for Rural only
Variables

Ln_income
(1)
(2)

0.360*
[0.188]
0.103
[0.064]

-0.097
[0.273]
0.189*
[0.101]
1.402***
[0.101]
-0.110***
[0.011]
-0.009***
[0.003]
-0.163*
[0.089]
5.107***
[0.205]

0.005
0.034
-0.442***
[0.044]
[0.036]
[0.161]
0.381***
0.379***
0.359***
0.331***
0.041
Reg_7
[0.042]
[0.039]
[0..33]

[0.029]
[0.160]
0.268***
0.269***
0.212***
0.185***
-0.249**
Reg_8
[0.030]
[0.027]
[0.023]
[0.019]
[0.126]
9.070***
9.060***
8.838***
8.812***
-0.863***
Constant
[0.080]
[0.056]
[0.068]
[0.049]
[0.331]
Observations
4,964
4,964
4,964
4,964
4,964

R-squared
0.338
0.338
0.383
0.382
0.435
Note: (1) Full model, (2) Restricted model. Robust standard errors in parentheses

-0.469***
[0.143]

Year
Interact=inremit*year
Loremit
Hhsize
Hhsize2
Headage
Gender
Child16
Elder
Technic
Secondary
Highschool
College
Pcannuland
Pcpereland
Pcforexland
Pcwatersuface
Reg_1
Reg_2

Reg_3
Reg_4

0.239***
[0.054]
0.119***
[0.016]
0.201**
[0.078]

-0.049***
[0.006]

-0.003***
[0.001]

-0.312***
[0.052]

0.728***
[0.063]
0.187***
[0.040]
0.507***
[0.056]
-0.219***
[0.040]
0.000***
[5.43e-06]
0.000***

[7.89e-06]

0.000***
[0.000]
0.058**
[0.027]
-0.107***
[0.028]
-0.389***
[0.068]
-0.262***
[0.030]

0.107***
[0.042]
0.242***
[0.013]
0.114*
[0.064]
0.065***
[0.020]
-0.089***
[0.020]
0.003*
[0.002]
-0.001**
[0.001]
0.017
[0.018]
-0.332***

[0.044]
-0.020
[0.041]
0.415***
[0.052]
0.109***
[0.033]
0.494***
[0.044]
-0.229***
[0.033]
0.000***
[4.26e-06]
0.000***
[6.61e-06]
-5.44e-07
[1.97e-06]
0.000***
[0.000]
0.035
[0.023]
-0.065***
[0.025]
-0.192***
[0.060]
-0.200***
[0.026]

0.105**
[0.042]

0.242***
[0.013]
0.115*
[0.064]
0.066***
[0.020]
-0.057***
[0.005]

Ln_education
(1)
(2)
0.358*
[0.189]
0.107*
[0.064]
-0.100
[0.273]
0.191*
[0.102]
1.373***
[0.105]
-0.108***
[0.011]
-0.007**
[0.003]
-0.145
[0.090]
5.064***
[0.207]

-0.202
[0.170]
-1.649***
[0.324]
1.281***
[0.149]
3.969***
[0.238]
-1.260***
[0.127]
-0.000
[0.000]
0.000**
[0.000]
-0.000
[0.000]
-0.000
[0.000]
-0.199*
[0.120]
-0.662***
[0.127]
-0.778**
[0.340]
-0.395***
[0.130]

Inremit

0.239***

[0.054]
0.118***
[0.016]
0.199**
[0.078]
-0.008
[0.026]
-0.069***
[0.023]
0.002
[0.002]
-0.003***
[0.001]
0.026
[0.022]
-0.309***
[0.054]
-0.057
[0.050]
0.727***
[0.063]
0.181***
[0.041]
0.506***
[0.056]
-0.209***
[0.041]
0.000***
[5.45e-06]
0.000***

[8.21e-06]
1.57e-07
[2.93e-06]
0.000***
[0.000]
0.059**
[0.028]
-0.390***
[0.030]
-0.390***
[0.068]
-0.261***
[0.032]

Ln_texpen
(1)
(2)

-0.002***
[0.001]

-0.345***
[0.043]

0.420***
[0.052]
0.115***
[0.032]
0.491***
[0.043]

-0.228***
[0.032]
0.000***
[4.20e-06]
0.000***
[6.18e-06]

0.000***
[0.000]

-0.093***
[0.019]
-0.224***
[0.057]
-0.227***
[0.020]

-1.645***
[0.323]
1.315***
[0.147]
3.997***
[0.237]
-1.290***
[0.125]

0.000**
[0.000]

-0.219**

[0.104]
-0.711***
[0.110]
-0.903***
[0.338]
-0.420***
[0.116]

Ln_healthcare
(1)
(2)
0.081
[0.135]
0.285***
[0.048]
0.243
[0.191]
0.175**
[0.076]
-0.068
[0.064]
0.003
[0.006]
0.001
[0.003]
-0.135**
[0.062]
-0.322**
[0.155]
0.903***

[0.142]
0.182
[0.199]
0.144
[0.120]
0.091
[0.169]
-0.321***
[0.121]
-2.29e-06
[0.000]
0.000**
[0.000]
-0.000
[7.80e-06]
0.000
[0.000]
0.198**
[0.092]
-0.377***
[0.098]
-0.404*
[0.215]
-0.188*
[0.107]

0.090
[0.135]
0.288***
[0.048]

0.250
[0.191]
0.193**
[0.076]
-0.034*
[0.018]

-0.153**
[0.060]
-0.429***
[0.133]
0.924***
[0.115]

-0.387***
[0.100]

0.000**
[0.000]

0.353***
[0.067]
-0.250***
[0.078]

Reg_5
Reg_6

-0.286***
[0.105]

-0.876***
[0.323]
4,964
0.435

0.207
[0.126]
0.505***
[0.121]
0.442***
[0.095]
4.662***
[0.237]
4,964
0.095

0.334***
[0.112]
0.626***
[0.106]
0.566***
[0.074]
4.606***
[0.121]
4,964
0.093

*** significant at 1% level; ** significant at 5% level; * significant at 10% level)

Source: Author's estimation from panel data of VHLSS 2006-2008

75