Does governmental microcredit benefit child labour in the poorest regions? New evidence from a transitional economy

Southeast Asia

Vietnam

Labour Market

Microcredit

NV Duy; AM Ngoc

2018

Nguyen, Vu Duy, and Mai Ngoc Anh. “DOES GOVERNMENTAL MICRO CREDITING BENEFIT CHILD LABOUR IN THE POOREST REGIONS? NEW EVIDENCE FROM A TRANSITIONAL ECONOMY.” Economics & Sociology 11.3 (2018): 333–344. Web.
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Secondary data: Project 135-II. Available at: https://www.ngocentre.org.vn/node/200.

2018

Program 135-II

The first stage of the program was conducted in the period 2001-to 2005, while the second phase of the program was implemented from 2006-to 2010. The endline survey occurred in 2012.

The overall objective of Program 135 is to reduce poverty rates, improve the agricultural productivity of the main crops, and increase the school enrollment rate in the Northern Mountains, Vietnam. Also, the project focus on the development of productive infrastructure in poor areas in this region by providing financial support for the poor to foster farm and off-farm activities The paper, on the other hand, aims to examine the influence of credit access on child labor.

The eligibility criteria to benefit from the Program-135 are not clear in the paper.

The intervention of Program 135-II is not discussed in the paper.

• Several working days per month for children aged 6-14 in a household.
• Total income is divided by household size.

Regression Analysis, Instrumental Variables, and Heckman Approach

Study design/Identification Strategy: the endogeneity of explanatory variables is one of the empirical challenges when considering the linkage between credit access and child labour. The study uses credit networks as an instrumental variable for credit access. Loan networks at the commune level in 2007 as an instrumental variable for the credit variable of each year of the data (2004- 2007) were constructed. To alleviate concerns related to the exclusion restriction, the Lewbels method was used (set of endogenous regressors against exogenous regressors; use of residuals, etc). To avoid the problem of selection bias (e.g., households are poor, so they are eager to obtain access), a Heckman selection model was estimated.
Sample: the study uses two surveys, including Baseline and Endline surveys of Program 135-II which were conducted in 2007 and 2012, respectively. Program 135-II is a Northern Mountains Poverty Reduction Project. The overall objective of Program 135 is to reduce poverty rates, improve the agricultural productivity of the main crops, and increase the school enrollment rate in the Northern Mountains, Vietnam. Also, the project focuses on the development of productive infrastructure in poor areas in this region by providing financial support for the poor to foster farm and off-farm activities. The two surveys were conducted by the General Statistical Office of Vietnam in two stages. The first stage of the program was conducted in the period 2001-to 2005, while the second phase of the program was implemented from 2006-to 2010. The two surveys cover the same sample of 6,000 households living in 400 communes. All these communes are located in the areas with the most difficult socio-economic conditions. In addition, nearly 76 percent of surveyed households belong to ethnic minority groups. Due to surveys in communes with the most difficult socio-economic conditions, 43 of 63 provinces were included in these two surveys. Those surveys provide a lot of information on the characteristics of individuals, households, and communes. Furthermore, the most important information on the credit of households from various ethnicities such as Tay, Thai, Muong, H’Mong, and Dao are available in the datasets.
Survey Instrument: The household questionnaire collected detailed information on characteristics of household members, education, employment, healthcare, housing, durables, and participation of households in targeted programs are contained in the household data. The commune questionnaires included information about the characteristics of communities such as demography, population, infrastructure, off-farm job opportunities, natural calamities, diseases of domestic animals, and crop plants. . Then, the commune data and household-level data are merged to create a unique commune-firm data for this study. Taken together, these surveys can be considered the most comprehensive and the best data source to study ethnic minority groups in Vietnam.

Access to credit only decreases the probability of child labor for households with income per capita greater than a certain threshold, which implies that policies for relaxation of credit constraints for households may not be effective unless accompanied by the strategies to help households overcome the minimum threshold of income.

Child Labour

Households

Local

Access to credit only decreases the probability of child labour for households with income per capita greater than a certain threshold.

Access to credit only decreases the probability of child labour for households with income per capita greater than a certain threshold, which implies that policies for relaxation of credit constraints for households may not be effective unless accompanied by the strategies to help households overcome the minimum threshold of income.

N. A.