INTRODUCTION
Research background
Vietnam is a developing country with 94,6 million people, and around 55,3 million people in working-age 1 This number accounted for 58,5% of the total population
Table 1.1 Total population and 15-64-year-old population’s growth rate from 1990 to 2050
Table 1.1 above illustrates the total population and the population aged 15 to 64- year-old and their growth rate from 1990 to 2050 in Vietnam According to Probabilistic Population Projections of United Nations (UN), the growth rate of the total population of Vietnam will slow down It will decline gradually from 10% in
1 Statistical Yearbook of Vietnam 2018 - GSO
2020 to 3% in 2040 and reach only 2% in 2050 The growth rate of the population aged 15 to 65-year-old have rapidly decreased from 14% to minus 4% in 2050 It means that the people of Vietnam will experience growth slowly while the number of the labor force is falling in the next 30 years
There are three critical points in the population policies during the past 40 years, which lead to the dynamic change in the population structure in Vietnam: reducing birth rate and death rate, and focusing on improving people's quality of life These policies had led to the decrease in the Total Fertility Rate while the life expectancy was increasing
Table 1.2 TFR and Percentage of youth people to total population from 1989 to
Sourse: Collected from Vietnam Population and Housing census year 1989, 1999,
Table 1.2 above shows that in 1989, a female in the child-bearing ages gave birth to 3.8 children, but in 2018 this figure was only 2.04 children This fall in TFR resulted in a rapidly decreasing percentage of youth population, down from 39.2% in 1989 to 23.1% in 2018
On the other hand, Vietnam has rapid population aging, and the aging process in Vietnam is as quick as the process in Japan and China
Table 1.3 Global population aging trend
Country Population Aged 65 and Above (% of Total)
“Year” column in Table 1.3 shows the entire year of a country transforms from an aging population to an aged population country According to UNFPA, the so- called “aging population” period is when the proposition of people aged 65+ to the total population accounts for 7% or more And “aged population” period happened when the proposition of 65-year-old or more population reaches 20% to the total population
It takes only 34 years for Vietnam to become a country with aged population in which the old-age dependency ratio reach 20% Based on the data shown in Table 1.3, Asian countries such as Taiwan, Japan, Singapore, and Vietnam has a quicker process of aging than American and European countries The rapidly aging process will bring an additional burden to the working-age population, which is the primary resource for economic growth
Population policies are legislations, management programs, and other government activities that aim to change or adjust current population trends for the growth and prosperity of the Nation Depending on specific objectives and situation, the Government will issue policies and laws to guide and regulate the process of population development
The Vietnamese Government has soon realized the vital role of the population to the social-economic growth Council of Ministers (now is called Government of the Socialist Republic of Viet Nam - GOV) issued the first population policy of Vietnam – The Decision No 216/CP on 26th December 1961; guiding the childbearing with the aim of mothers' maternal health, for the welfare and harmony of the family, so that the parenting can be thoughtful, the female procreation is appropriately instructed
Later on, the seventh National Party Congress (from 1991 to 1996) - The Central Committee of the Communist Party of Vietnam considers population activities and family planning are an essential part of National development strategies, as well as a critical factor in enhancing the life quality of each Vietnamese people, family, and community as a whole
In the next period, several solutions were implemented simultaneously For example, GOV formulated a Population - Family Planning Strategy period from
1993 to 2000 and 2001 to 2010 and 2011 to 2020, and the newest is "Vietnamese
Population Strategy to 2030" The Strategy was issued on 22nd November 2019 in the Decision No 1679/QD-TTg, signed by Prime Minister Nguyen Xuan Phuc
The overall goal of this Strategy is maintaining the replacement fertility rate; controlling the sex ratio at birth to natural equilibrium; taking advantage of the golden age population effectively; adapting to population aging; reasonably distributing the population density and improving the quality of population to contribute to rapid and sustainable national development
For effective implementation, the Strategy clarifies eight objectives to be done until
- Objective 1: Maintain a replacement fertility rate firmly, reducing fertility disparities between regions and entities
- Objective 2: Protect and develop the population of ethnic minorities with less than 10 thousand people, especially these ethnic minorities that are at a high risk of rapidly declining their population
- Objective 3: Control the sex ratio at birth to the natural balance, strive to maintain the age structure at a reasonable level
- Objective 4: Improve the quality of the population
- Objective 5: Distribute the community reasonably and ensure National defense and security
- Objective 6: Complete the construction and operation of the national database on population, accelerate the integration of population factors into the formulation and implementation of socio-economic development plans
- Objective 7: Maximize the golden-age population structure's advantages, creating a strong motivation for the country's rapid and sustainable development
- Objective 8: Adapting to the aging population, promoting health care for the elderly.
Problem statement
In the previous part, an introduction to the current status of the population, the Vietnamese population’s policies, and the Strategy to 2030 of Vietnam are shown
It can be seen that, in the context of Vietnam in the near future, the decline of working-age population combines with the rapidly aging process will make the working-age population will become the limited resource and get additional burden
In addition, although Vietnam has transformed from an emerging country to a low- middle-income country recently, Vietnam needs to use the labor workforce in an effective and wise way in order to grow faster and to avoid the middle-income trap
Therefore, deeply understanding the relations between the changing economically active population structure and economic growth is needed
In this thesis, the correlation between population, dependent population, and the Vietnamese economy will be examined with the more updated longitudinal data by utilizing quantitative methods.
Purpose of the study
There are two major purposes of this study
The first purpose is to estimate the impact of population structures’ change on economic growth using quantitative method with provincial data
The second purpose is to propose appropriate policies to utilize human resources effectively, as well as to promote sustainable economic growth in Vietnam.
Research questions
This research is going to answer the two major questions:
1) How does the working-age population structure influence economic growth in Vietnam? And to what extent?
2) What should the Vietnamese government do to utilize the population resource effectively?
Research method
The thesis uses the quantitative approach with provincial data The time scope is from 2011 to 2017 Data of all variables are collected from GSO, except PCI, which is obtained from VCCI
The secondary data obtained from GSO and VCCI is analyzed by applying the Random Effect model, the relations between GRDP and the change in the working- age population's structure will be explored Inside the model, the working-age population and dependent population were considered as the primary explanatory variable, while other factors such as PCI, life expectance at birth, working hour, FDI, and vice versa are considered as the control variables There are dummy variables in the model to explore the difference between the six areas of Vietnam.
Significance of the study
This thesis contributes two significant points:
Firstly, the thesis uses the most updated database available that were collected from the GSO – a trustworthy Vietnamese data source Hence, the estimation result of this thesis illustrates the most updated situation of the population and the economic growth of Vietnam
Secondly, the previous Vietnamese papers mostly use national-scales data to estimate the population's impact on economic growth, while this thesis uses provincial-scales data for analysis.
Thesis’ structure
There are six major parts in this thesis: Introduction, Literature review, Methodology, Data, Estimate results, and Policy Recommendations
Chapter 01: Introduction – in this chapter, an overview of the population in Vietnam, population policy, and the necessary information of this thesis, such as research purposes, research questions, research methods, and study’s contributions are introduced briefly
Chapter 02: The literature review concentrates on showing the previous academic works on this topic in the past This chapter is divided into three central parts At first, the international papers in the related subject are briefly described and then move on to Vietnamese papers, which is exploring the relationship between population and economic growth After reviewing the previous documents, both internationally and domestically, I discuss the research gap
Chapter 03: Research Methodology – This chapter discusses the methodology and introduces the model used in the thesis Moreover, the reason for choosing the model and variables, and the explanation of some variables will be described in more details The two hypotheses of this thesis are also discussed
Chapter 04: Data – this chapter focusses on the description of the data collection step by step The data used for analyzing will be described in details
Chapter 05: Estimation result – in which the Random Effect model is used The discussion of the result is divided into two main parts In the first part, the impact of the change in the working-age population on the economic growth based on the correlation coefficient of the primary explanatory variable on the dependent variable after running the model In the second part, I discuss the impact of other factors in the economic growth model
Chapter 06: Policy Recommendations – in this chapter, some policy recommendations will be given The suggestions of these policies are for both the local and the central government.
LITERATURE REVIEW
International literature on the impacts of changing population
Throughout the world, the question of whether or not population growth affects economic growth is raised by both demographers and economists In the past, various points of view regarding the impacts of population growth on development have appeared Coale & Hoover (1958) believe that an increase in the population harms growth While Simon (1981) – one of the optimists, believes that a population increase leads to positive economic growth
However, the change in the population age structure due to demographic transition has various social and economic implications Several studies explore the vital role of changing population structure on economic growth by cross-country data The first paper that should be mentioned is the paper of David E Bloom and Jeffrey G
Williamson (1998) The paper estimates the impact of demographic variables on economic growth, and the results show that future demographic change will tend to depress growth rates in East Asia, while it will promote more rapid economic growth in Southeast and South Asia This model is considered the first model, in which the demographic variables was taken into account ̃ ( )
This formulation focuses on both the total population and the working-age population
Table 2.1 Bloom and Williamson (1998)’s variables
1 ̃ Growth rate of real GDP per capita in 1965-90 ̃
N: total population, L: the number of workers, y: output per worker and ̃ : output per capita
2 ( ) Income per worker at time
3 Growth rate of economically active population,
+ Growth rate of population under age 15 + Growth rate of population over age 64 + Growth rate of the dependent population + Average birth rate, 1967-87
+ Average death rate, 1967-87 + Average infant death rate, 1967-87 + Average noninfant death rate, 1967-87 + Log life expectancy, 1960
+ Log years of secondary schooling, 1965 (average years of secondary school for population age 25 or older)
+ Log GDP per capita as a ratio of U.S GDP per
Order Variable Calculation method capita, 1965 + Government savings as a share of GDP, 1970-90
+ Natural resource abundance (share of primary product exports in GDP in 1971)
+ Access to ports dummy (indicating if the country is landlocked)
+ Openness + Tropics dummy (indicating if country is located between the tropics)
+ Ratio of coastline to land area + Quality of institutions (index of quality of governmental institutions)
The model proposed by Bloom & Williamson (1998) is considered as guidance for identifying the primary relationship between population composition and economic change Based on this model, Mikiko (2015) develops a regression equation to explore how the population composition by age group related to real GDP per capita in Japan and to explore how the dependency ratio related to economic change In her equation is:
( ) = ( ) + ( ) + ( ) + t: the time index j: a lag value of 0 or 1
1 Growth rate of real GDP per capita in 1965-90
N: total population, L: the number of workers, and ̃ : output per capita
54, 55-59, 60-64, 65-69, 70-74, 75+) or Youth and elderly dependency ratios
Mikiko (2015) applied the data from Japan for the period 1975-2011 The results are impressive She divides the elderly population into three groups, ages 65-69, 70-
74, 75+ The coefficients between these groups and real GDP per capita are negative However, the results illustrate that the 70-74 population age groups have a negative link to economic growth, while the 75+ age group has a positive relation with Japanese economic change
Bloom & William (1998) divide the population into three groups such as young population, working-age population, and elderly population, but Mikiko (2015) divides the population into more group (11 groups), hence her research could explore more which age groups are associated with the increase or decrease in economic growth
In some aging and aged countries such as Taiwan, China, Japan, and the U.S., there are various ways that economists consider the impact of population aging on the economy Houang, Lin & Lee (2019) prove that although the aging workforce in Taiwan has influenced economic growth positively, the elderly dependency ratio still poses a significantly negative impact on economic change In another paper focusing on the impact of the aging process on trade balance, Fu (2013) finds that population aging affects the trade balance in a certain extent However, “the influence is conditional and especially different between developed and developing countries.” Besides, Maestas, Mullen & Powell (2016) use the U.S States data from
1980 to 2010 to calculate the influence of aging population on national output per capita Their estimation result is that “a 10% increase in the fraction of the population ages 60+ decreases the growth rate of GDP per capita by 5.5%” In these papers mentioned above, the data of the population is divided into several age groups for analysis For instance, the elderly population is divided into 60-69, 70-
79, 80-89 and the working-age population is divided into 5-7 age groups This is important because each age-group would contribute to the economic growth in different magnitude and different ways In Vietnam, there is still a limitation for collecting data in this way, especially on the provincial scale.
Vietnamese literature on the impacts of changing population
on economic growth in Vietnam:
Economic growth is not only a top concern in every country in the world but also in Vietnam Both research and empirical theory show that population is one of the factors that strongly influence economic growth and is of prime importance to the socio-political situation in each country In Vietnam, in the last decade, the question of how population change influences economic growth has been raised Tran & Do
(2008) used provincial data in the period 2000-2004 and applied the neo-classical growth model with Cobb-Douglas production function to answer the question They found that education contributed to provincial economic growth, and GDP per capita was higher in the provinces with higher human capital levels Nguyen & Ha
(2010) had a more specific result They used data on population growth rate and the proportion of working-age population to total population to estimate the advantage of the so-called “golden population period” in Vietnam They pointed out that an increase in the working-age population has a significant impact on economic growth From 1999-2009, change in the population’s age structure has contributed 2.29% to the economic growth rate
There are three Vietnamese papers used another method, so-called National Transfer Accounts (NTA) method, to estimate the influences of changing population age structure on Vietnamese economic growth These papers using NTA method are “Effects of population age structure changes on economic growth in Vietnam” of Bui (2012); “Estimating NTA for urban and rural areas in Vietnam” of Giang and Pham (2012) and “Impact of population’s age structure changes on economic growth in Vietnam and policy recommendations” of Giang et al (2015)
Figure 2.1 An example of life-cycle surplus
Source: Giang (2015), using data from VHLSS 2012 and IO Table 2012
The NTA is different from other methods because it focuses on a life-cycle surplus of a person Figure 2.1 shows an example of a life-cycle surplus in Giang (2015)’s paper The life-cycle surplus of typical Vietnamese starts from age 23 to 53 It means that the population aged 23-53 had income higher than consumption, and they created savings, which in turn could stimulate economic growth Therefore, this age group has a positive relation with economic growth These results are similar among three papers, although these papers using different time scales (VHLSS 2008 and VHLSS 2012) and different area scales (the whole country and urban/rural area) In addition, Bui (2012) finds that population aged 20-54 contributes 2,91% to the growth rate of GDP per capita from 1989-1999, and this figure falls to 2,75% in the period from 1999-2000
In NTA method, the IO table should be in the same year or closest to the VHLSS data There is an updated data for VHLSS which is VHLSS 2016, but there is no update on I/O Table Therefore, there is no room for applying this method.
Research gap
The literature review of Vietnam papers shows that most researches using data before 2010 and the NTA method using data 2012; in other words, the time period is rather not updated Moreover, the previous papers are using national-level data
In the thesis, the data will be updated with more recent and provincial data In addition, I use panel data with random effect, and taking into account the provincial competitiveness index (PCI) as a control variable to see wherever or not the governance of provincial government involves in improving the outcome per capita of the province/city Table 2.3 below shows the comparision and contrast of this study to the previous research papers mentioned in this chapter
Table 2.3 Compare and contrast to previous research papers
My research Mikiko Oliver (2015) Nguyen (2012)
Scale Province (Vietnam) National scale (Japan) National scale
RE OLS Model life table
Result Expected result: estimate changing in working-age population and changing in the dependent population affect economic growth through GRDP per capita
An increase in the 70-74 population age group is associated with a decrease in economic growth, while an increase in the 75 and over population age group is associated with an increase in economic growth in Japan
From 1979-1999, decreasing in growth rate of population combined with rising in growth rate of working-age population had contributed 0,83% to economic growth rate This figure for
My research Mikiko Oliver (2015) Nguyen (2012) the period 1999-
Conclusion
This chapter focuses on reviewing the previous papers on this topic both in Vietnam and other countries The relations of population and economic growth has been paid attention to researchers throughout the world, and various methods are being applied In Vietnam, the previous papers discover the effects of population on economic growth by using national-scale data and applying the NTA method, as well as simple regression In this thesis, the RE method will be employed to analyze the panel data collected on the provincial scale.
METHODOLOGY
Overall Quantitative Analysis and the Econometrics
Only a quantitative method is used in this thesis, longitudinal data analysis using STATA application version 16.0 For the testing model, starting with simple OLS regression After that, more advanced panel data methods are tested, which are Fixed Effect (FE) and Random Effect (RE)
For testing the model, the author utilizes two tests Firstly, in order to decide between a random-effects regression and a simple OLS regression, The Breusch and Pagan Lagrangian multiplier (LM) test is used The LM test’s null hypothesis is that there is no significant difference across units After running the RE model, type
“xttest0” command in STATA, the result of LM test is shown below:
Figure 3.1 The LM test result
The P-value of the LM test is 0.0000; it means that the null hypothesis of the test is accepted There are significant differences across the entities; therefore, using the
RE model gets a better result than a simple OLS regression
Secondly, the Hausman test is used to test which model FE or RE is better There are three steps to do this test Step 1: Run the FE model, save the estimation result
Step 2: Run the RE model and save the estimation result Last step: Run the
“hausman fixed random” command in STATA The results of running Hausman test is below:
Figure 3.2 The Hausman test result
The P-value of both the Breusch & Pagan Lagrangian multiplier test and Hausman test is 0.0000, very significant It means that the RE model is more appropriate than the FE model and the simple OLS model for the collected panel data Therefore, the Random-effect model is chosen to employ in this thesis.
Regression Model
The regression used in this thesis is shown as bellow:
( ) : is working-age population in year t and province i;
( ) : is dependent population in year t and province i;
X: contain nine control variables which are (i) Population density; (ii) Share of Industry and Construction to GRDP, (iii) Share of Agriculture, Forestry and Fishing to GRDP; (iv) PCI; (v) Life Expectancy; (vi) Foreign Direct Investment; (vii) The percentage of female labour age 15+; (viii) working hours; (ix) trained employed and five dummy variables
The nine control variables are chosen based on previous papers mentioned in the Literature review Except the PCI, which is represented for governance efficiency, is added to check whether or not the governance of the provincial government involves improving the outcome per capita, which is calculated by GRDP divided to total population These variables’ descriptions are shown in Table 3.1 and Table 3.2
The name of Dependent Variable, Explanatory Variables, Control Variables, and the sources are described in the following table The definition of variables which was collected from GSO will be quoted directly from Statistical Yearbook of Vietnam:
Table 3.1 Independent and Dependent Variables’ definition and source
GRDP per capita Calculated based on raw data
Variables Source Definition from the GSO
GSO The working-age population is
Labour force which includes the employed and unemployed person at 15 years of age and above by province.
Calculated based on raw data from the GSO
Since the total population and labour force at 15-year-old can be collected from GSO Dependent population is calculated by Total population minus Labour force
Population density GSO The average number of people per square kilometer of the terriorial area, calculated by dividing the population (time point or average) of a certain residential area to the area of that territory
Share of Industry and Construction to
Calculated based on raw data
Share of Agricuture, Forestry and Fishing to GRDP (%)
Calculated based on raw data from the GSO
PCI VCCI The Provincial Competitiveness
Index is used for ranking the performance, capacity and willingness of provicial governments to business-friendly regulatory environments for private sector development
Life Expectancy at birth (years)
GSO Reflects the prospect of a newborn could live for how many years if the current mortality model is maintained, this is the key statistical indicator of the Life table
FDI (Mill USD) GSO Foreign direct investment projects licensed in year t by province
Female labour force participation rate (%)
GSO The percentage of female who participating in the economy, age
Working hours GSO This is the average of working- hours per week of 15-year-old and older employees by province
GSO This is the percentage of trained employed population at 15 years of age and above by province
There are six areas in Vietnam, namely Red River Delta (RRD), Northern midlands and mountain (NMM), North Central and Central coastal (NCC), Central Highlands (CH), South East (SE), and Mekong River Delta (MRD) Each area has its characteristics of Geography, Area, Population density, Culture as well as Climate
These differences in characteristics will lead to the difference in the development of the social-economic of each area Therefore, to get a better estimation, there are five dummy variables for each area are created and shown in the following table:
Table 3.2 Dummy Variables for Areas dum_Mekong_River_Delta 1 0 0 0 0 0 dum_Central_Highlands 0 1 0 0 0 0
Based on the Economic Theory and the results of previous paper mentioned in Chapter 2, Literature Review, there are expected signs’ coefficients of variables between GRDP per capita and independent variables which are shown in the following table: dum_North_Center_and_CCA 0 0 1 0 0 0 dum_Red_River_Delta 0 0 0 1 0 0 dum_South_East_Area 0 0 0 0 1 0
Table 3.3 Expected signs of Variables
Variables Sign Variables Sign ln_wa_population + lnagri_share + lndepend_pop - lntrain_employed + lndensity - pci + lnindustry_share + FDI + lifeexpectancy + femalelabour +
Note: the variables which have its name start with “ln” are in natural logarithm forms
In this thesis, there are two alternative hypotheses tested, which are:
H1 The change in the working-age population has positive changes in GRDP per capita
Another hand, H2 The increase in the number of dependent people, including older people and youth, will lead to a decrease in the GRDP per capita
In this chapter, the methodology which is applied in this thesis is shown in detail
Vietnam, which is described in the next chapter The application is STATA ver.16.0 There are two main explanatory variables, eight control variables, and five dummy variables for areas included in the model The detail of the data is illustrated in the next chapter.
Hypothesis
In this thesis, there are two alternative hypotheses tested, which are:
H1 The change in the working-age population has positive changes in GRDP per capita
Another hand, H2 The increase in the number of dependent people, including older people and youth, will lead to a decrease in the GRDP per capita.
Conclusion
In this chapter, the methodology which is applied in this thesis is shown in detail
Vietnam, which is described in the next chapter The application is STATA ver.16.0 There are two main explanatory variables, eight control variables, and five dummy variables for areas included in the model The detail of the data is illustrated in the next chapter.
DATA
Data collection
There were three steps used to collect the data related to the population as well as data of GRDP of 63 provinces, cities of Vietnam:
- Step 1: Noted down all the variables could be included in the model after reviewing all the material such as books, previous papers, articles on this topic
- Step 2: Separate the potential variables into two catalogs: The variables could be downloaded directly from GSO, and other websites and variables have to be calculated by hand
- Step 3: All the data was put into an excel file, calculated the needed variables by using some simple formulas After that, all the data is imported to STATA to analyze
Due to the limited data source, several expected variables could not be found to include in the model For example, the labor force data from 15-year-old and above divided to age group by province, or employed population from 15-year-old and above by kinds of economic activity by province.
Data Descriptive
Table 4.1 Descriptive statistics of variables
Variable Obs Mean Std.Dev Min Max ln_GRDPperca 441 17.12736 0.5383683 16.17327 19.34776 ln_wa_population 441 13.47139 0.5511029 12.20407 15.30072 lndepend_pop 441 13.0641 0.6095831 11.38168 15.20895 lndensity 441 5.674356 0.9888792 3.758872 8.31801
The following table illustrates the description of the data which is collected and used in this thesis The data included 441 observations; there is no missing observation Therefore, the data is a perfect balance The time scale is seven years, from 2011 to 2017.
Conclusion
In this chapter, the process of data collection and description of the data are explained in detail All the data comes from the Statistical Yearbook of Vietnam, Statistical Yearbook of each province and cities, Report on Labour Force Survey which were published by GSO, exclude the data of PCI which is collected from the website: https://pcivietnam.vn owned by Vietnam Chamber of Commerce and Industry (VCCI) All the data are collected at the provincial level in 7 years from
2011 to 2018 There are 63 provinces and cities in Vietnam Therefore, the number of observations is 441 lnindustry_share 441 -1.214073 0.4605735 -2.14475 -0.1347058 lnagri_share 441 -1.607707 0.8285776 -4.945346 -0.6076715 lntrain_employed 441 2.722177 0.3805621 1.629241 3.758872 pci 441 58.84549 3.88742 45.12 73.53
ESTIMATION RESULT .29 5.1 Impact of changing on working-age population on GRDP per
Impact of other factors on GRDP per capita
Averagely, at a 0.01 significant level, six control variables show a significant impact on the province's output per capita:
- In terms of Share of Industry and Share of Agriculture to GRDP per capita, an increase of 1 percentage point in industry outcome per GRDP is associated with an increase of 0.22 percentage points in GRDP per capita However, an increase of 1 of -0,62 percentage point in GRDP per capita
- In terms of FDI and PCI, although the PCI's coefficient shows that it has a positive effect on economic growth, but the magnitude of its effect is not too large When the PCI raises a 0.00261 score, the GRDP per capital increase by 1% While FDI increases 1 million USD is associated with an increase of 1% on GRDP per capita
- In terms of working hours Working hour is considered as one of the foremost labor inputs; therefore, the more working hours, the more output will be produced
However, in this research, the result indicates that working hours negatively affect the independent variable In other words, reducing the working hours by 1 hour will make people's quality of life measured by economic outcome per capita increase by 1% This result would support the debate of wherever or not, Vietnam government should reduce the working-hour in order to enhance productivity
- In terms of dummy variables, the coefficient for areas dummy variables provides a measure of the difference between the areas identified by the dummy variable (MRD, CH, NCC, RRD, SE) and the area that serves as a reference (NMM) Here, the coefficient for NCC, RRD, SE and CH area are -0,33; -0,618; -0,621 and 0,691, respectively These results suggest that, after the effects of all explanatory and control variables are taken into account, only CH area scores 0.691 points higher on the GRDP per capita than the reference area (NMM) Another area like NCC, RRD, and SE score 0,33; 0,618; 0,621 points lower on the GRDP per capita than NMM area, respectively
However, the other variable, such as lndensity and femalelabour, do not show any significance concerning the GRDP per capita.
Conclusion
To summarise, the RE results show an increase in the working-age population is associated with an increase in GRPD per capita This result indicates sufficient in the number of dependent people, including older people and youth, will lead to a decrease in the GRDP per capita.
POLICY RECOMMENDATIONS
Policy recommendations
The results discussed in Chapter 5 demonstrates that from 2011 to 2017, the average effect of working-age population over GRDP per capita when it changes across seven years and between provinces/cities is positive Some previous papers predict that the “Golden population structure” 2 start in 2006 and will end in 2047 (Nguyen,
2010) or “Demographic dividend” 3 of Vietnam will last until 2041 (Giang, 2015)
However, either of “Golden population structure” and “Demographic dividend” do not bring high economic growth by themself automatically The Vietnamese central government as well as local governments should pay attention to develop long-term policies to utilize the labor force effectively
Firstly, education plays a vital role in improving labor productivity Not only children need to study, but also the young and middle-age population need to learn to obtain advanced knowledge and skills in their field The higher skills and the better qualification they get through training and life long learning, the higher labor productivity a state would get Specifically, the estimation results of this research illustrates that an increase of 1 percentage point in the number of trained employed population is associated with an increase of 0.117 percentage points in GRDP per capita
2 Based on demographics approach, a country is considered to have “Golden population structure” when the share of children (0-14 years of age) is smaller than 30% and the share of old people (aged 65 and over) is lower than 15%
3 According to NTA approach, a country is considered to archive demographic dividend when the growth rate of economic support ratio is greater than 0
Secondly, the productivity in agroforestry and fisheries is lower than in other sectors in terms of industrial perspective Although Vietnam has set goals in industrialization and modernization and the GDP growth mainly relies on manufacturing and service sectors, agroforestry and fisheries still have an essential role not only in the economy but also in the livelihood of residents in rural areas
Therefore, it is necessary to pay more attention to improve infrastructure, improve the quality of plant varieties, as well as apply modern equipments with high technologies Besides, the government should develop and strengthen disaster prevention systems for areas that usually suffer from floods and typhoons to minimize the impacts of natural disasters on agricultural production
Last but not least, older persons gradually increase, nevertheless it is not a sign of harm to economic growth Various papers proved that older persons keep their contributions to the economy by participating in both formal and informal workforce (HelpAge International 2016) In Vietnam, the life expectancy has increased and life qualify also has improved through the last few decades Older people nowadays have a long healthy life after retirement at age 55-year-old for female and 60-year-old male Therefore, promoting older people’s employment should be a priority Raising the retirement age is an appropriate policy when the pension age of Vietnam is lower than other developing countries However, creating job opportunities for the aging workforce and maximizing utilization of the high- qualifying older human resource are needed The old-age workforce would contribute to enhancing workforce productivity in many indirect ways, such as participating in training, sharing their skills and experience of their working-life to younger, or working in unpaid care work like taking care of their daughter/son’s children.
Limitations
Although much effort has been put into this research, there are remaining
Firstly, this research mainly focuses on the working-age population due to limited data sources There was no specific data for each age-group, only data at provincial- scales for total population and population in the working-age were found It would be better if there are separated data for the youth population and the elderly population by age group and by province
Secondly, in this research, several variables are not taken into model such as migration and labor export variable, and urbanization rate variable For instance, according to data of the net-migration rate by province provided by GSO, this figure has fluctuated between cities/provinces The immigration rate of big cities and industrial provinces is very high compared to the agricultural provinces This movement somehow affects the labor force balance of each province and should be considered to measure how it affects the economy as a whole
Thirdly, this thesis employs RE method, therefore one of its limitations is that it cannot estimate the reverse causality of economic growth to the changes in population structure Additionally, the time scales is short, only 7 years Thus, there is no lag variables included in the model.
Conclusion
Chapter 6 is the last chapter; some recommendations for policy implementation are provided The Vietnamese government should invest in training for the labor force, improve the agroforestry sector's productivity, and maximize the utility of the old- age workforce for economic growth Besides, the limitations of this thesis are also included
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