Luận văn research on education and employment in vietnam in 2010 empirical research in the red river delta and the northwest area

However, most studies focus on wage premiums for education in Vietnam only, using Vietnam Household Living Standards Surveys from ycars prior to 2008, This paper uses the VIILSS of 2010

VIETNAM NATIONAL UNIVERSITY, IANO]

INTERNATIONAL SCHOOL

GRADUATION PROJECT

PROJECT'S NAME

Research on education and employment in Vietnam in 2010 - Empirical

research in the Red River Delta and the Northwest area

SUPERVISOR: MSc HOANG KIM THU STUDENT: VƯƠNG THUỶ ANH

MAIOR: Tnternational Business

ACKNOWLEDMENT

Bearing in my previous J am using this opportunity to express my radiant sentiment ic

place on record my best regards, deepest gratitude and special thanks to Ms Tloang

Kim ‘Thu who in spite of being exuaordinavily besy with her cutics, took time out to

hear, guide and keep me on the coriect path She pays much altention in supporting me

with careful and precious guidance which were extremely valuable for my study both

theoretically and practically

J axtend my sincerely thanks to {rternational School, all teachers at ISVNU, my family

and friends, who support me a lot for five years studying here, heip me to accamuiate

DECLARATION

Lhercby declare that the Graduation Project “Researen on education and employment

in Vietnam in 20110 - Empirteat research in the Red River Delta and the Northwest

area” ig the regilts of my own research and has never been published in any work of

others, During the implementation process of this project, Thave seriously taken

roscarch cthics; al! Endings of this project are cesults of my own research and surveys,

all references in this project are cleatiy cited according to regulations

T bear full responsibility for the fidelity of the number ard data and other

cortents of my graduation project

Table of Notations and Abbreviations

1.7, Research general structure

1.8 Research method and process

1.9 Expected results

CHAPTER 2: LIFERATURE REVIEW

2.1 Definition and background

2.1.2.1 Actual situation of education and emnlayment in Vietnarl 20

2.2.4 Theories about education and employment

3.3 Data analysis procedure

CHAPTER 4: RESEARCH RESULT , 4.1, Descriptive statistic

4.2.2 Question 2: Does higber years of schooling can lead to higher income? 46 4.2.3 Question 3; Boes people who have higher income spend mure money

4.2.4, Question 4: Are there any differences ix these relationships between the

List of table

Ladle 2 1: Schoal-age population by educutiva level (2014)

Tale 2 2: General information about ‘Lhe Red River Neha and The Northwest

‘Table 3 1: Research variables

Table 4 1 Mean years of schooling

Table 4 2: Summary of educational expenditure

Table 4 3: Distribution of education expenditure

‘Yable 4 4: Job opportunity in Viemam

Table 4, 5: Average annual income

Table 4 6; Disiribution of annual iceome,

Figure 2 I: Fducation System

Figure 2 2: Gross enrolment rate at edu

Figure 2 3: Highest educational attainment (2009 and 2014)

Tigure 2 4: Smployment status by highest educational attainment

Figure 2 5: Average hourly income by highest educational attainment and gender (in

2012)

Figure 2 6: Annual expenditure on education (2004-2010)

Figure 2 7: Education expenditure breakdown (2010)

Figure 2 8: Gross enzokment rate of education fevels in RRD and NW in sekoo 3

2000/2001

figure 2 9: Literacy rate of over 15 years old people (2002-2012)

Figure 4 1: Distribution of years of schooling

Figure 4 2: Regression result (job_op/ school_yeurs)

Figure 4, 3; Relationshio between years of schooling and income

Figure 4, 4: Regression result In_ineoute/school yearsAworking ho

Figure 4 6: Relationship between income and educational expenditure

Figure 4 7: Regression result jab_op/ school_years in RRD

Figure 4 8: Regression resuit job_op/ school_years in NW

Figure 4 9: Repression reguits In income/school_years/working hours in the RRD 5

Figure 4 egression result In_incume/school_years/working hours in the NW 51

+ Regression result cdu_ exp/ inoome na HW

Figure 4.

Thesis: Research on education and cmployment in Victnam in 2010 - Empirical

research in the Red Kiver Delta and fhe Northwest area.

CHAPTER 1: INTRODUCTION

1.1, Problem statements

“EBduealion is ihe most basic insurance against poverty Education represents opportunity At all ages, it empowers people with the knowledge, skills and confidence they need to shape a betier future™ said by Iriaa Bokova, Director-General of UNESCO

Léucation is one of the key factors in deciding employment and income of peopie in the market economy ‘The world's researches showed that those with higher education

evel, in general, will have higher income According to UNBSCO (2041), one extra

year of schooling increases an individual's carnings by up to 10%,

la Vietnam, education and training is a naticna!l volicy of top ptiarity People who loem to read, write and count will provide e better future for their families and countries Improved education provokes poverty reduction, equips the workforce with

the necessary skilis to trarsform an agricullure-hascd economy into an industrialized economy and so many other areas are positively affected,

Thirking of the importance of education as human capital motivates people to invest in education to raise productivity, and to increase social benefits Government expense

on education increases through years Up to 2012, the Government's education

expenditures accounted for more than 6% of GDI and spending for education ia one:

fih of total goverment expenditure (The Wozld Bank Data) Bducaticral

expenditure in each houscho!d may account for a large amount of total income

Important achievements have been made in the programme of universalization of

primary and lower secondary education However, despite the achievements in

improving access (0 educulion for the masses, meny remain issues about its low quality The quality of human resources in Viewam reacted 3.79 points (out of 10),

ranked 11 out of 12 countries in Asia ‘the human resource of our country is weaker in

quality, lack of dynamism and inmevation, While there exists a paradox that is the awnbes of labour with bachelor, masler degree or higher cducational attainment did not have a job is still at an alarming rate The number of people without jobs increased 72,000 up to 162,000 peopte in carly 2015, in which groups of graduated from college

and university accounts for nearly 17% (Total Business Support, 2015)

ILis therefore essential linkage between education and employment The importance of education to e country’s develapment strategy has bean widely acknowledged Because

of this, there are many analyses of the returrs to education However, most studies

focus on wage premiums for education in Vietnam only, using Vietnam Household

Living Standards Surveys from ycars prior to 2008, This paper uses the VIILSS of

2010 to provide an updated and deta‘icd cxamination of the relationship among indicators: years of schooling, jod opportunity, income and education expenditure and

the differences in these relationships between the Red River Delta (RRD) and the

Northwest (NW) of Viet

1.2 Reasons for researching

It is often assured that education is a passport ta goad jobs People who spend more time for improve their education level may have goad jobs with higher income Also, people in Vietnam bave a tend of paying much money for education because il is

id highest interest These

widely belicved (bai investment for education car

conceptions provoke the authcr to find and examine evidences in order to clarify

relationship between years of schooling and job opportunity, years of schooling and

income and the link between income and educazional expenditure,

10

In this study, 1 did not attempt to experiment widely in Lhe whole country, but tied to

distinguish bewween lwo regions which are Red River Delta where labour concentrated

leest

the most and Northwest where labour concentrated

1.3 Research objectives

The objective of this study is to understand the relation among years of schooling, job

opportunity, income and expenditure on education The objectives of the research are

as follows:

Obdjectwe J: Examine the relationship between years of schooling affect job opportunity, whether or not peuple with more time at schoo! have better chance of job

Objective 2 Fxamine the relationship between years of schooling affect income, if

increasing years of schoolirg lead i higher income or not

Objective 3: Examine the relationship between income ané educational expenditure,

Objective ¢: Distinguish the differences in three relations above between the Red River

Data and the Northwest of Vietham

1.4 Research question

Question 1: Does higher years of schaoting lead to better cb opporinnity?

Question 2: Doss higher yeass of schooling can lead to higher income?

Question 3: Does people who have higher income spend more money than people with lower income?

Question 4: Are there any differences in these relationships for the Red River Della

and the Northwest?

1.5 Research subjects

The target sul of the research ere civilian and non-institutional population

inchuded people on vacation, temporarily on hospital, and students living away from

home during the school year,

1.6 Research scope

This study attempt to observe people inside Vietnam in general and pay attention to two regions which are the Red River Delta (incluced 11 provinees: Bac Ninh, Ha Nam,

Ha Noi, Ha ‘Vay1, Hai Duong, Hai Phong, Hung Yen, Nam Dinh, Ninh Binh, Thai

Bính, Vịnh Phuc) and the North West (included 6 provinces: Dien Bien, Hoa Binh, Lai

Cháu, Son La, Lav Cai, Yen Ba!) of Viet Nata

1.7 Researeh general structure

1.3, Research method and process

Phe analysis is based on qualitative and quantitative data from the Vietnam Housekold Living Standard Survey (VHESS) conducted hy the General Statistics Office of

Vietnam (GSO) combined with Plan and Investment under supporiing by Unit

Nation Development Program (UNDP) in 2008 After the raw material, the author uscs

"bla ‘Tay was merged in Hu Nol in 2008

STATA software fo examine and analyze data and use regression to find the relationship between these vatialhles

1.9, Expected results

This research expects to have tollowing outcomes hy the end of the research:

- &xpected result {: There is 2 positive relationship between years of schooling

and job oppurtunity In general, an increase in years of schooling provokes

better chance of jab for peuple

- Expected result 2: There is a positive relationship hetween years of schooling

ard income In general, people who have longer vears of schaoling tend to be more productive then eara higher income

- Expected vesult_3: There is a positive iclationship between income and

educational expenditure A household with higher incame tend to pay more for education

- Expected result 4: There are positive relations between years of schooling, job opportunity, income and experliure on education in both the RRD and the

NW However, with the same years of schooling can lead to different rate of job opportunity and income in :wo regions Particularly, in the RRD will have higher chance of opportunity and income because of human capital, geography ole Similarly, with the same level of income, a household in the NW will pay

quore for less for education than 4 household in the RRD

tạ

CHAPTER 2: LITERATURE REVIEW

2.1 Definition and hackgraund

2.11 Definition

241 Years of schooling

According to UNESCQ, years of schooling provides the nutaber of years of education

completed by population, excluding years spent for repeating grades and preschooi, (UNESCO, 2013)

Years of schooling ate derived from data on educational! attainment which is known as

the highest education level that an individual completed

Ia Vietnam, education is the responsibility of the Ministry of Education and ‘training (MOET)

14

Education system in Viemam is divided & to four main parts

choal education including kindergarien for children trom 3

First stage is pre

months wo 3 years old and nursery school for children from 3 wo 6 years old

Second stage is general education including arinacy school (5 years) fom grade

1 to 5, lower secondary school (4 years) from grade 6 to 9, and upper secondary

school (3 years) from grade 10 to 12 After each fevel, there is a leaving examination and stuéents are required to pass this examination to enter higher level of education, In these three levels, only primary levels are compulsory education

Third stage is vocational education Ner all of people attend this stage because after graduated from lower secondary school, people may choose between upper

secondary schoal (high schaol) and vocational education

Forth stage is higher education Institutions vf higher education can be

olleges or research institutes There is a national entrance universities, senior

examination for students to enter a college or university They usually spend

about 2 to 6 years for graduated college or university, 2 years for master degree

and 3 to 4 years for doctoral level

Jn summary to ge: primary certificate, an individual spend at least 5 years, and it takes

4 years more of them to get lower secandary certificate A perscn usually spend at least

18 years to get high schoo! cersificule und up w 22 years old they can get a bachelor

from, university; 24 years cld, a person ma ave a moasier degree, In order to get the

highest level of education, a person may take a 4-year-time to study, and they can get

their doctoral degree at the age of 26

16

234.1,2 fob opportunity

Job oppor:enity in this rescarch is understand as the current work situation oF an

individual that can he “have job” ar “do noi have job”

F is differen: from uncmployment which only counts people in the labour force According to Statistics Canada, the labour force is constituted by the employed that

have a job or business and the unemployed who are without work, ere available for work, und ure aviively seeking work (Statistics Cenada, 2008)

However, job opportunity contains ali people who are observed both in the labour force

and not in the labour force

2.1.1.3 Income

“Income is money that an individual or business receives in exchange for providing a goad or service or through investing capital.” (Investopedia)

Tn this research, the authors would Eke to exploit “Income” in household scale only

Income is the amomnt of money thal an individual receives it may incinde wage, salary, interest payment, tental income, farming and ishing inconte, compensation, etc

In Vietnam, most of peaple have income from salary or wage by working According

to the Victnain Labor Law (2012), Article 91, the salary of a worker is agreed upon between the parties to the labor contract and paid according the productivity, quality and efficiency of the work performed The wage of a worker must cot be lower than the minimum wage rates regulated by the State

According to Decree 122/2015,NB-CP cated November 14th, 2015, starting January,

2016 the monthly minimum wage, which is used by businesses to calculate salaries for their workers, will be between VNU2.4 million and VND3.5 million (U$3107-156),

depending on regions (See appendix | to know minimum invome in each region)

2.1.1.4 Education expenditure

Education expenciture is the amount of money that pays for education There are two

kinds of expenditure on education which are: Goverrtnent expenditure and Sousehalds’

expenditure,

Governmen: expenditure on education is usually described as % of GDP According to

World Bank, Government expenditare on education as % of GDP (9) is total general

(local, regional and central) government expenditure on education (current, capital, and

transfers), expressed as a percentage of GDP It includes expenditure funded by

trausftrs trom international sources to government Divide total government expenditure for a given level of education (ex primary, secondary, or ail levels combined) by the GDP, and multiply by 100 The level of spending on education in

each counlry shows dhe country’s priority for education

Houschold expenditure on education is the amount of money that a household pays for their members’ education

In this research, the author analyzes data based on household scale only

In Vietnam, beside Government expenditure which is usually around 5 to 6 % of GDP,

household furds a higher proportion of total funding for

Bousebolds’ education expendinire is the amount of monsy that a household pays tor education, It includes tuition fee and cther fees as follow:

ices Junding to cover the costs of

- Tuilion fee: Vietaam government pro

compu'sory education at the primary and secondary levels For higher education

fevels, many institutions aid organizations receive substantial funding trom the

government, but cely mainly on the tuition fee as an important source of revenue, In some wealthier households, parents enroll their children in private

scheols where they pay ail tuition fees at higher cast

- Private tutoring and extra classes

18

- Contributicn for school fend aad parents? association

- Uniforms and other clothing required

- Textbook, notebook, pens, and other sappkes

2.1.2.1, Actual situation of education and employment in Vietnam

I cen be seen from the number that Vietnamese paya much attention to education and

training especially for chiZdren Through years, there are achievements in education

like higher sate of people go to school, higher educational attainment as years of

schooling inczease, However, there is a fact that educational attainment in Vietnam has

just increased in quantity but not quality, Education system in Vietnam stil! favor

theory and lack of practical application; besides, career orientation for students is not

considerable These limitations lead to high rate of graduated student who cannot gel

a job and low income Paradoxically, there are some people who have not even got a

backeior but they are the most successful

%® Schoni-age population

Vietnam population is around 90 million people in which the school-age population

accounts for nearly one-thizds of total population The table 2.1 gives information on

the number of yout from 0 to 22 years old at the end of 2014, While the number of people in the age of pre-primary level is around 4.5 million people which is abaut 5% over total population, people from 6 te 10 years old accounts for 7.44% end ‘his

cumber ic secondary level is one in ten In the age of tertiary education, theze are

Table 2 Í: Schoul-age popalation by cducation level (2014)

© ]School-age over total

| population (%) |

Source: (UNESCO Institute for Statistics)

>» Gross enrolment ratio

in spite of quite high rate of school-age population, not all people can afford to go to

school However, recently, the gross enrolment ratio (the number of pupils or students enrolled in a given level of education, regardless of age, expressed as a percentage of

the official school-age population corresponding to the sume level of education) has

increased through years

20

| 200 +

a0

f@ Pre-primary level Primary lave!

Figure 2, 2: Gross enrolment rate at education levels (2006-2014)

Source: (UNESCO Institute for Statistics)

The figure 2.2 illustrates the gross enrolment sate al cach level of education fiom 2006

to 2014 In this period, there is an upward trend in the number of people enter schools

In which, the percentage of participation in preschool increased the most from around

60% in 2006 to 81.35% in 2014; this data in primary level rose steadily from 97.16%

le 109%’, and the enralment rate in tertiary education nearly doubted (from 16% in

2005 w 30.4% in 2014)

The malio can exeood 10085 due to over-aged and under-sged children who enter school Tutefourly and/or repeat

de,

21

} Highest education attainment

Figure 2 3: Highest educational aticinment (2009 and 2014)

Source: (Két qua chit yéu Biéu tra dn s6 và nhá & giữn kỳ thời điểm 1/2/2014, 2014)

The figure 2.3 presents information about the proportion of highest education attainment Highest education level achieved has shitted in a 5-year-period from 2009

ko 2014, là gencral, graduation tate ab cach level increase thraugh times except pouple

without certificates and people just gradualed from prinwry schuol The number of people who do net have certificate did decrease one-thirds from about 21% in 2009 to only 14.4% in 2014 The percentage of people only passed the first five grades fell 1.4% from 27.6% in 2009 to 26.2% im 2014 In contrast, the rate of other educational

attainment, went up gradually after 3 years, The proportion of the population achieved

lewer secondary level reached 26.5% in 2014, increase about 2% and the fastest rise

was the number of people graduated from upper secondary school or high school which

22

highest level of education, the

was 25.6% in 2014 compared to 23.73% in 2009, At th

tate incteased almost two tites after 5 years to 7.3% in 2014, In summury, ikiere are

more people with higher educational attainmeat as the time changes; if means that

people take more time for studying thar: before

» Limitations and shortcomings of education system

However, there are some limitations and also the shortcoming of education system in

Vielnam According to Pha Hop Mai end Jun Wu Jang (2013), “the shortcomings are

sation is still low, payieg more attentions to quantity

overcume slowly; quality of

then qualin; phenomenon of commercializing education, inadequacies in choosing careers, works Methods of education for so long which do not fit the requirements of

the new era, is producing passive “people” who is good at theory but bad at practice

The situation of abuse of collection stady, exams are still heavy; negative still exists,

living standard of teachers is still difficult Must people do net consider leaming as

an understanding demand; «hey consider learming to get the qualification ta pursuit

their own interests Achievement disease, develop the quantity but not focus on the quality Evils of use illegal diplomes and certiticates; phenomenon of "real certificate without studying"; dishonesty in study and examinations, copying essays, dissertations tend to spread, which negatively effect on quality of the training to the yougg geueration's morai and social wast Phenomenon and trends of choosing majors of young people are ensy-to-eaming and easy-to-promotion in socisty leading to unbelancing of human resources.”

“As in other developing countries, Vietnam’s labour market is characterized by a low unemployment rate, but a high percentage of working paor with low incomes, notwithstanding long working hours In 2012, of the 68.2 milion people aged 15 and

over, 51.4 million were employed and 938,000 unemployed, Ihe workforce

participation rate was 76.8 per cent and the unemployment rate 1.8 per cent The low unemployment rate of 1.8 per cent is explained by the fact that poor people cannot afford to stay idle and have to work, usually in the infonmal sector with a meager incame.” (Fien, 2014)

Ta the first quarter ef 2016, there are 225,000 unemployed students who possess bachelor or master degree and up to 80% graduated student have to do jobs which are

not their major in school (Huyén, 2016)

> Work situation by highest educational attainment

No Primay lowar Uppsr Higher

ị edueation secondary secondary education

ị Highest educational attainment

Figure 2, 4: Reaplayment status hy highest educational attainment (in 2012)

Source: (Tien, 2014)

In general, as the educution attrinment increase, the chance of having job of a person

increases While people with na education and low qualification are unemployed the least, higher-ecucated and upper secondary workers are more likely to be usempicyed (43 per cent and 2.4 per cent compared to 0.7 per cent, 1 per cent and 2.1 per cent of

the Jawer Ievels) However, high educated people are less likely to stay inactive

a

(around 12 per cent as compared to 22.5 por cont, 26.2 por cent and 37.6 per cer of the lower levels) According to Tica M.D, (2014), the higher unemployment rate can be explained by the fact that educated people have higher reservation wages In addition,

it 18 importaot to underline two other possible explanations First, the stractural

mismatch between education and availability of jobs: the demand side of the labour iarkel is not able to absorb the skilis and knowledge of part of graduates The second factor is the low quality of education

> Average hourly income by bighest educational attaiunrent

Ao education Primary Lawer secandary Unper secondary Higher education i

Figure 2 5: Average hourly income by highest educational attainment and gender

(in 2092) Source: (Tien, 2014)

Figure 2.5 shows hourly wages by educational attainment in 2012, separately for males and females As is seen in most countries, on average, workers with higher education levels are paid much more per hour than those with lower levels of cducation, Male

25

(female) with higher education eam 37/300 (32.500} VNDyhour, 2.8 (3) times more

than those who did not attend school or did not complete primary schooling, Men are

consistently paid more than woinen with the same education level

» Tncome— Education expenditure

In the last 17 years (from 1998-2015), the Government has increased investment in education and iraining from over 13% ia 20% of the dial Gevernment expenditure that belongs to group of countries with the highest Govemment expenditure (Viet)

However, due to the small scale of the economy and the large proportion of school-age

population, the investment budget for this sector does not meet the demand, so that

there is a necessary need of household for educalivn-iraining

Households’ expense for education shows how important education and training is People usually spend fom 20-50% of their income for education, From 2002, annual

spending on education increased quadruple from 763,000 VND to around 3.4 million

Y¥ND in 2010 and there was an upward trend of expenses for education as the result of

increase in annual income of houscholds

Anon —— “—Espenditore on

education (2,000 Vain) t= tneame (3,000 VND)

2004 2006 2008 2030

Figure 2 6: Annual expenditure on education (2004-2010)

Source: (Vietuam Household Living Standard Surveys, 2004-2010)

+

Included in educational expenditure are tuition fee, extra class fee, some kinds of fund,

uniform, school supplics and oihers expenses as showed in figure

— a

3 School fund J extra class

a 14%

Figure 2, 7: Education expenditure breakdown (2010)

Source: (Vietnam Household Living Standard Surveys, 2004-2010)

More than half of the houschalds’ education expenditure is for tuition fee (39%) and private tutoring or extra class (14%) Besides, parents also have to contribute to school funding and parents’ association funding which accounts for nearly ane in ten of total spending, In addition, buying textbook as well as uniform and schoo! supplies like

notebooks, pens, otc accounts for around 20% of lotal expenditure And the last 20% is

for others payment which may include transportation fee, meals fee, etc

> Cases: Successful without qualificativn

Beside some data that indicates the positive relation between education and

employment, there are some special cases that can reach success without a certificate

In the world, there are many individual whe have succeeded without a college of even high school degree From the carliest pioneers of Silicon Valley, Bill Gates, to its coitemperery counterparts like Mark Zuckerberg, are billionaires without a college

z

dogree Harlicr, Abraham Lincoln regretted not receiving a formal degree that he

attended schaot “or Jess than one year in totel

Vietnam is not an exception There are many people who have demonstrated that net having a degree does not mean a person is uvt ambitious or capable

Ms Ngnyen Thi Nhu Loan (1960) — Chairman and general director of Quoc Cuong Gia Lai is one of them Without « university degree, she did not even complete grace :2, she is still a genius manager and aas fabulous reputation in Vietnam market with ker

povsession up to 400 billion’ VND,

The most famous story of being successtul without certificate in Vietnam is Mr Doan

Nguyen Duc ~ chairman of Hoang Anh Gia Lai group He attended to the university

emirance examination four times and he all failed, However, it was motivation for him

to build his empire like daday and become one of the wealthiest people in Vietnam

2.1.2.3, Differences between the Red River Delta and the Northwest

» General information

The Red River Delta and the Northwest aro two regions lecated in the North of

Vietnari Aithoueh these two regions are very close t each others, there are clear

differences between them in geography, teztain, or climate While the Red River Delta

has more conditions to develop economy, the other one contains of much difficulties

and obstacles in order to improve socio-econcttic

The Red River Nella (Vietnamese: Đông bằng sông Hồng, or Chân thé sing Héng) is

the fat low-lying plain formed by the Red River and its distributaties merging with the Thai Binh River in northern Vietnam The delta measuring some 15,000 square km

is wall protected by a network of dikes It is an agriculturally rich area and densely

populated Most of the land is devoted to rice cultivation Ji has « population of almest

19 milion

2s

‘The Northwest (Vietnamese: Tay Ras) is one of the regions of Vietnam, located in the

Lhe characteristics of terrain in North

access in: there are many high mountains such as Woung Lien Son mountain range and

Ma River mountein range The climate of the area is relatively harsh: the winter is

usually cold and dry that influence significantly to the structure and growth of the

crops Moreover, this is the region with high mounisins, so that te local traffic

contains many difficulties And the inadequacy of the transpor! infrastcucture is a major barrier to investment cnvironment in the region lead to increase the cost of products, reduce the competitiveness of the region

Most areas of the Northwest have particularly difficult socio-economic conditians and

high proportion of ethnic minorities, so that the life of the people is still difficult, high poverty rate of households compared to the region in the country

29

‘Table 2 2: General information about ‘The Red River Delta and The Northwest

Early childhood Primary Education SecondaryFdiscation |

Figure 2 8: Gross enrolment rate of education levels ia RRD znd NW in school

year 2600/2001

Sonrce: (Báo cáo Quốc gia: Giáo đục cho mọi người 2015 cúa Việt Mam, 2014)

30

The figure reports the enrolment rate of educational leveis in two research regions in the academic year 2000/2001, In general, the enrollment rate of the RRD (except

primary level) iy higher than the NW The proportion of people who attend early

chidhood and secondary level in the NW is nearly a half lower than the RRD However, the rate of people entering primary level is nearly the same at both regions; even the NW is a little bit higher It means that, under supported of the gavernment in Universalizing educalion program, there are more people enter school, especially rural people who have much difficulties in life

> Literacy rate

Literacy rate

Source: (Bao cAo Quốc gia: Giáo dục cho mọi người 2015 của Việt Nam, 2014)

Thore are more literate people as the result of increasing people entering school In

general, the literacy rafe increases as the time flow In addition, the literacy rate in the

RED increased sicadily and was always 11% higher than the rate of Vietnam while the

3

literacy rate of the NW was 2 5% lower thar: the average and there was a decrease in

the rate of literacy in the NW

2.2, Theory and related research

2.2.1 Theories about education and employment

2.2.1.1 Human capital theory

The human capital theory which wes originated and flourished in the United State with

assumption of perfect competition by Gary S Becker and Jacob Mincer asserls thai

education or raining raises the prodvetivity of workers by imparting useful knowlecge

der the human

and skills, hence raising workers’ income Shim and Chang, said

capital theory, joo selection is affected by the amount of education that the worker

receives beceuse labor market is perfect competitive market Therefore, individuals increase the mvestinant of human capital to increase expected profit The decision is

made based on the calculation of preseri investment and cost, and future income level

(profit) In case of national or corporation’s decision on the investment of training and education depends on the future contribution tc corporation and national economy growth of individual’s productivity increase after the investment of education and training, and its comparison to current opportunity cost.” (Shim Ji-tlyun, Chang Hea-

Fung, 2012)

Many of research studies that emerged alter the introduction of fionan capital theory acknowledge the importance of human capital theory but at the same time ihey point

out other problems According tv Rita L Dobbs, Judy Y, Sun and Paul B Robers,

there were three mains limitations cf the human capital theory The first problem was embedded in the assumptions of the theory which is porfect competition However, the

teality is shat all markets ave imperfect competition and iaformation is asytametric

Under these conditiors, a challenge that bas not been addressed by human capil

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theory follows: How is the privete information about potential employees” producrvity

acquired trough training and education and transmitted to potentiel hiring

organizations so that they can choose the right people £ their organizations? The second

challenge is that human capital theory did rot address whether a person would be more

productive if he ur she stayed in seieol longer or not, The third problem is that human capital theory was derived most'y based on observed quantitative correlatious between

ndividuals (Rita L Dobbs, Judy Y Sun,

potcutial employees use them a3 a signal to differentiate fron others

Speace and Arrow separately formelized the hypothesis that education served as a

credentialing process that signaled high inaate productivity to organizations From firms' perspective, the sorcening theory considers hiring aa investment under

uncertainty Among cther information asymmetries, employers are aot surz of the

productive capabilities of a potential employee at the time of hiring Nor will this

information become available immediaiely atter hiring Lhe job may take time to learn

(Arrow, 1973) (Spence, 1973)

cation to ke a

Accordingly, the theory considers the filtering rofe played by

productivity-adding role that conveys much-needed information by the economic

te markets Because productivily and ability of a potential employee is not

agents i

publicly observable, but diplomas arc, and such information can be cb‘sined easily be

organizations at no cost, (Rita L Dobbs, Judy Y¥, Sun, Pau! B Roberts, 2008)

la summary, the basic assumption in the human capital theory is that a7 increase in

eancational attainment or training leads to an increase in productivily which provokes

higher wage In screening theory, it is stated that another purpose of education and iraining is fo provide a signaling method for high productivity in order to use such inormation as a screening device to distinguish the potential productivity of workers

2.2.2, Related research

Several researches have been advanced for explaining the relationships between

indicators of education and employment

According to UNESCO (2013), there is a clear positive correlation between education

level and labour force participation Thos? who have invested the most time in

education are generally also most likely ta enter the labour market upon graduating trom education The link between in higher education and wage employment appears particularly pronounced, although in mos! countries even a little education appears

in terms of improving chances of wage employment, imeportan

In a research of studying relationship between educalion and employment on Malawi

in 2010, the wudiors found that education is positively correlated with wage employment, and that wage employment is associaced with higher levels of household

income (Vincent Castel, Martha Phiti, Marco Stampini, 2010}

There are some researches which conducted lo examine how education atfects employment in Vietnam

Gallup (2002) uses two rounds of the Vietnamese Living Standards Survey (VLSS) from 1993 and 1998 und a simple OLS method to evaluate the impact of wage employment on income incquality in Vietnam The study found that the rate of return

to education in Viernam — that is, the percentage of wage increase far one additional

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year in education — almost doubled from a low iovel of 2.9 per cent in 1993 to 5.0 per

cent in 1998, but was still relatively low compared te other developing countrics

According to Thanh, KN (2006), the rate of return of one more year of schooling at high school (upper secondary school) was 11.43% ‘hong, P.L (2008) stated that education has an important influence on the income of the emp-oyee Adding one more year of schooling could lead ww increase income from 1.3 to 1.7% In addition, Doan and Gibsons (2016), using VHILSS daa from 1998, 2002, 2004, 2006 and 2008, analyze the trend in wage premiums over time Their analysis shows that the rates of return to education increased significantly and consistently over the periad from 3.8 per

cent in 1998 to 10 per cent in 2008.