Globalization and school-work choices in an emerging economy: Vietnam

This paper examines the effect of increased access to industrial jobs on educational attainment using data from the 2009 Vietnam Census of Population and Housing. Vietnam’s accession to the WTO, concluded in 2006, was the signal for a fourfold increase in foreign direct investment, primarily by firms seeking low-cost blue-collar labor for assembly and light manufacturing. We find that the district-level intensity of jobs in foreign-invested firms has a significant negative association with the likelihood that teenagers will be recorded as being in school, for urban males and females and (to a lesser extent) for rural females. High dropout rates in the hinterlands of booming industrial areas like Ho Chi Minh City are due in part to relatively easy access to industrial labor markets that offer almost no premium for learning acquired in high school. The decision to enter the labor force before completing high school will likely have long-term implications for the individuals themselves, and for aggregate economic growth since competitiveness in the global economy depends on sustained increases in labor productivity.