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Are Returns to Investment Lower for the Poor? Human and Physical Capital Interactions in Rural Vietnam

  • Dominique van de Walle

If the gains from investment depend on knowledge, but households cannot hire skills, then poorly educated households will achieve lower returns than educated ones. If the income-poor are less well educated, then they will also have lower returns to investment. The paper tests this argument for the case of irrigation in Vietnam, a setting where existing irrigation can be treated as exogenous at the household level with appropriate controls for the determinants of facility placement. Strong complementarities between household education and irrigation expansion suggest that, unless disparities in education are redressed, reforms will generate an inequitable growth process in Vietnam. Copyright Blackwell Publishing Ltd 2003.

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Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 7 (2003)
Issue (Month): 4 (November)
Pages: 636-653

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Handle: RePEc:bla:rdevec:v:7:y:2003:i:4:p:636-653
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  1. Van der Walle, Dominique & Cratty, Dorothyjean, 2003. "Is the emerging nonfarm market economy the route out of poverty in Vietnam?," Policy Research Working Paper Series 2950, The World Bank.
  2. Aghion, Philippe & Caroli, Eve & García-Peñalosa, Cecilia, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Scholarly Articles 12502063, Harvard University Department of Economics.
  3. Lockheed, Marlaine E & Jamison, Dean T & Lau, Lawrence J, 1987. "Farmer Education and Farm Efficiency: Reply," Economic Development and Cultural Change, University of Chicago Press, vol. 35(3), pages 643-44, April.
  4. Ravallion, Martin & Datt, Gaurav, 1999. "When is growth pro-poor? Evidence from the diverse experiences of India's states," Policy Research Working Paper Series 2263, The World Bank.
  5. Jalan, Jyotsna & Ravallion, Martin, 1998. "Behavioral responses to risk in rural China," Policy Research Working Paper Series 1978, The World Bank.
  6. Strauss, J. & Thomas, D., 1995. "Empirical Modeling of Household and Family Decisions," Papers 95-12, RAND - Reprint Series.
  7. Minot, Nicholas, 1998. "Generating disaggregated poverty maps," MTID discussion papers 25, International Food Policy Research Institute (IFPRI).
  8. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023 Elsevier.
  9. Jimenez, Emmanuel, 1995. "Human and physical infrastructure: Public investment and pricing policies in developing countries," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 43, pages 2773-2843 Elsevier.
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