Princelings and Paupers? State Employment and the Distribution of Human Capital Investments Among Households in Viet Nam

Ian Coxhead and Diep Phan
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Diep Phan: Assistant Professor of Economics at Beloit College

Asian Development Review, 2013, vol. 30, issue 2, 26-48

Abstract: Inequality in access to education is known to be a key driver of income inequality in developing countries. Viet Nam, a transitional economy, exhibits significant segmentation in the market for skilled labor based on more remunerative employment in government and state firms. We ask whether this segmentation is also reflected in human capital investments at the household level. We find that households whose heads hold state jobs keep their children in school longer, spend more on education, and are more likely to enroll their children in tertiary institutions relative to households whose heads hold nonstate jobs. The estimates are robust to a wide range of household and individual controls. Over time, disparities in educational investments based on differential access to jobs that reward skills and/or credentials help widen existing income and earnings gaps between well-connected “princelings” and the rest of the labor market. Capital market policies that create segmentation in the market for skills also crowd out investment in private sector firms, further reducing incentives for human capital deepening. © 2013 Asian Development Bank and Asian Development Bank Institute.

Keywords: human capital; state-owned; education; connections; inequality; Viet Nam (search for similar items in EconPapers)
JEL-codes: J24 J45 O15 P23 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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