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Education and Poverty in Vietnam: a Computable General Equilibrium Analysis

Author

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  • Marie-Hélène Cloutier
  • John Cockburn
  • Bernard Decaluwé

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.

Suggested Citation

  • Marie-Hélène Cloutier & John Cockburn & Bernard Decaluwé, 2008. "Education and Poverty in Vietnam: a Computable General Equilibrium Analysis," Cahiers de recherche 0804, CIRPEE.
  • Handle: RePEc:lvl:lacicr:0804
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    References listed on IDEAS

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    1. John Cockburn, 2002. "Trade Liberalisation and Poverty in Nepal: A Computable General Equilibrium Micro Simulation Analysis," CSAE Working Paper Series 2002-11, Centre for the Study of African Economies, University of Oxford.
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    Cited by:

    1. Stefan Boeters & Luc Savard, 2011. "The Labour Market in CGE Models," Cahiers de recherche 11-20, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    2. repec:dau:papers:123456789/14733 is not listed on IDEAS
    3. Hannah Schuerenberg-Frosch, 2015. "How to Model a Child in School? A Dynamic Macrosimulation Study for Tanzania," South African Journal of Economics, Economic Society of South Africa, vol. 83(1), pages 117-139, March.
    4. Björn Nilsson & Mohamed Ali Marouani, 2015. "The Labor Market Effects of Skillbiased Technilogical Change in Malasya," Working Papers 20150006, Université Paris 1 Panthéon Sorbonne, UMR Développement et Sociétés.
    5. Lofgren, Hans & Cicowiez, Martin & Diaz-Bonilla, Carolina, 2013. "MAMS – A Computable General Equilibrium Model for Developing Country Strategy Analysis," Handbook of Computable General Equilibrium Modeling, Elsevier.
    6. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, Elsevier.

    More about this item

    Keywords

    Computable general equilibrium model; public expenditures; education; Vietnam; welfare; poverty;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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