Education and Poverty in Vietnam: A Computable General Equilibrium Analysis

CIRPEE Working Paper No. 08-04

56 Pages Posted: 18 Apr 2008

See all articles by Marie-Hélène Cloutier

Marie-Hélène Cloutier

University of Montreal - Department of Economics

John Cockburn

Partnership for Economic Policy (PEP)

Bernard Decaluwe

Université Laval - Département d'Économique

Date Written: April 2008

Abstract

Education is often promoted as the solution to poverty in the developing world. Yet, fiscal discipline has led to reductions in public spending on education. We examine the poverty impacts of a cut in public subsidies to higher education, accompanied by corresponding tax cuts, in a general equilibrium framework applied to Vietnam. This policy is shown to have strong and complex impacts through various channels: a direct increase in the private costs of higher education, a reduction in education investments, a shift in the economy's skills mix in favor of unskilled workers, a rise in the wage premium for skilled workers, education and consumer price changes, etc. When all of these contrasting impacts are taken into account, we find that a higher education subsidy cut reduces welfare and increases poverty in Vietnam. While rural and agricultural households would benefit from this reform, urban and non-agricultural households would lose out.

Keywords: Computable general equilibrium model, public expenditures, education, Vietnam, welfare, poverty

JEL Classification: C68, H42, H52, I21, I32, J24, O53

Suggested Citation

Cloutier, Marie-Hélène and Cockburn, John and Decaluwe, Bernard, Education and Poverty in Vietnam: A Computable General Equilibrium Analysis (April 2008). CIRPEE Working Paper No. 08-04, Available at SSRN: https://ssrn.com/abstract=1121955 or http://dx.doi.org/10.2139/ssrn.1121955

Marie-Hélène Cloutier

University of Montreal - Department of Economics ( email )

C.P. 6128, succursale Centre-Ville
Montreal, Quebec H3C 3J7
Canada

John Cockburn (Contact Author)

Partnership for Economic Policy (PEP) ( email )

P.O. Box 30772-00100
ICIPE - Duduville Campus, Kasarani
Nairobi
Kenya

Bernard Decaluwe

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-5561 (Phone)
418-656-7798 (Fax)

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