Export expansion and children’s school-work decision: Evidence from Vietnam

This paper examines the impact of export expansion on human capital investment in Vietnam induced by the U.S-Vietnam Bilateral Trade Agreement (BTA). Using a rich household survey, I show that provinces more exposed to the tariff reduction from the BTA experienced a small decline in school attendance for children aged between 10–17 years old and a corresponding increase in children’s market work participation. This adverse BTA effect is on average stronger for boys, older children and households with low-educated head, indicating a dominating substitution effect that increases the opportunity costs of schooling. However, this masks a substantial heterogeneity across the gender-age dimension. Specifically, I find that while the BTA shock causes older boys to take market work for pay, it increases employment in household business for young girls and makes them substitute into domestic work.