NATIONAL ECONOMICS UNIVERSITY FACULTY OF ECONOMICS GROUP ASSIGNMENT TOPIC Research on factors affecting the labor productivity of Vietnamese households from 2014 to 2016 FE62A – Group 2 Hanoi, 0[.]
NATIONAL ECONOMICS UNIVERSITY FACULTY OF ECONOMICS GROUP ASSIGNMENT TOPIC: Research on factors affecting the labor productivity of Vietnamese households from 2014 to 2016 FE62A – Group Hanoi, 03/2023 Econometrics Assignment Page of 15 Group | FE62A TABLE OF CONTENTS ABSTRACT I INTRODUCTION II LITERATURE REVIEW III METHODOLOGY .7 Data Model and variables Conclusions and recommendations .11 REFERENCES .15 Econometrics Assignment Page of 15 Group | FE62A ASSIGNMENT MADE BY: No Full name Nguyễn Thị Hằng (leader) Nguyễn Thị Ngọc Hà Lê Hồng My Mai Thị Hương Giang Student ID 11201314 11201200 11202618 11021083 % 100% 100% 100% 100% ACKNOWLEDGEMENT Firstly, we would like to express our sincere thanks of gratitude to our lecturer, Mr Phung Minh Duc for giving us the treasure opportunity to work with him Thousands of thanks would have to deliver for his patience, enthusiasm, motivation and immense knowledge toward us We are grateful to have our assignment done under his valuable time and guidance He provided us with detailed guidance with his professional experience and knowledge Without him, we would not be completed our assignment successfully Lastly, special thanks to all the group members for their endless efforts, time, and hardworking in completing this research We appreciate full cooperation from every single of them By that, this research can be completed successfully Econometrics Assignment Page of 15 Group | FE62A ABSTRACT Drawing on a new set of nationally representative, internationally comparable household surveys, this paper provides an overview of key features of labor productivity in Vietnam Labor productivity is a major component of agricultural development Boserup is the scholar most associated with the view that labor productivity declines with the intensification of agriculture This paper aims at investigating the determinants of agricultural productivity and rural household income The results of the regression of the array data with the fixed-effects model show that the difference in GDP per employee between the industrial-service sector and the agricultural sector has a positive impact on the profit from farming activities rural households The study also shows the role of the local government in managing and operating economic activities and the importance of the current agricultural-rural development investment policies Three econometric models namely: Pooled ordinary least square (POLS), fixed effects (FE), and random effects (RE) model were used to test the effect of factors on Labor productivity Keywords: agriculture, the relationship between agriculture and industry - services, rural households in Vietnam, labor productivity, economic scale Econometrics Assignment Page of 15 Group | FE62A I INTRODUCTION In this paper, we investigate the role of labor productivity growth and the determinants of labor productivity growth through panel data between the period 2014 and 2016 Numerous studies on labor productivity have been conducted around the globe with the aim of evaluating and identifying the variables influencing the productivity of construction workers, forecasting labor productivity, etc In particular, as well as the low labor productivity of the economic sector in other countries, the research results assist economists in identifying problems that affect labor productivity and in developing strategies and solutions to improve labor productivity in economic projects The results will become worthwhile information in determining the major steps to improve the performance of project completion time and also as part of further research in modeling the interaction relationship between the key factors affecting productivity to improve labor productivity We investigate the role of labor productivity growth and whether the determinants of labor productivity growth rates between the variables: Labor productivity = total income from farming/total labor, Age of household head (1-under 30; 2-from 30 to 45; 3-from 46 to 60; 4-over 60), Number of members of the household and Total pesticides expenditure/total arable land The level of productivity in construction showed a decreasing rate compared to other sectors (Bernstein 2007) The facts of unsatisfactory project completion are indicators of problems associated with productivity and productivity problems usually associated with labor performance (Lowe 1987; Handa and Abdalla 1989; Olomolaiye and Ogunlana 1989) Efforts to produce better performance and increase productivity in labor require an understanding of the various indicators of productivity as a path to understanding the performance of the project (Atkinson et al 1997) Besides that, efforts to improve productivity in the labor industry can essentially be done by reducing pesticide expenditure and selecting a suitable age The number of members of the household and understanding the age of the household head affecting labor productivity is needed to determine the focus of the necessary steps in an effort to maximize labor productivity, thereby increasing productivity and overall project performance The results will be useful information for to construction improve labor productivity in Vietnam Econometrics Assignment Page of 15 Group | FE62A II LITERATURE REVIEW Up to now, the world has had many studies on labor productivity, with the objectives of assessing and identifying factors affecting the productivity of construction workers, and forecasting labor productivity The results of the research help economists see issues affecting labor productivity, thereby building strategies and solutions to improve labor productivity in projects economic projects in particular as well as the lack of labor productivity in economic sectors in other countries Studies on factors affecting labor productivity have been carried out in the world that the author has summarized as follows: Authors Title Method of data Influence variables analysis Nicolas Determinants of productivity Method of - Labor Belorgey, per employee: An empirical moment - Management Rémy Lecat estimation using panel data - Technology - Financial - External Vandenberghe Ageing and Employability Panel data - Average productivity hereafter - The number of workers (e.g: young, prime-age, old/men, women) - Productivity Nicole The Effect of Population Aging Instrumental - Outcome Maestas, on - Number of Kathleen Economic Growth, the variables J Labor Force, and Productivity individuals aged 60 Mullen, David - Population aged 20 Powell - Output shocks Serafeim Labor Polyzos Agricultural Sector in Greece: panel model capital per worker Garyfallos Determinant - The size of the Arabatzis Interregional Econometrics Assignment Productivity of Factors the Fixed and Differences Page of 15 effects - The amount of used farms Group | FE62A Analysis - The degree of crop intensification and the inflow of circulating capital - Infrastructure - Climatic conditions and geographical zones Shamil Factors influencing George Naoum productivity sites: A on labor OLS approach construction state-of-the-art literature review and a survey - Experience of the selected site and project managers - Project planning - Communication - Procurement method III METHODOLOGY Data The data used in this study are taken from the Household Living Standards Survey (VHLSS) conducted by the General Statistics Office (GSO) in the years 2014 and 2016, including information reflecting the state of production of agricultural households such as total revenue, expenditure, the output of crops, level of use of inputs for agricultural production such as land, fertilizers, pesticides, human characteristics, etc demographics of the household such as age, education, employment status and income of workers In addition, we use data sets provided by the General Statistics Office on indicators such as total agricultural land area, total labor productivity, GDP structure, labor structure, and structure Investment capital is broken down by agricultural, industrial, and service sectors in 2014 and 2016 to calculate indicators representing the state of development of agriculture and industry - services at the provincial level We also exploit the Provincial Competitiveness Assessment (PCI) dataset, conducted by the Vietnam Chamber of Commerce and Industry (VCCI) in the years 2014 and 2016, for the purpose of assessing the role of economic practices of local governments for agricultural production The Econometrics Assignment Page of 15 Group | FE62A complete array dataset used in the study includes 4930 agricultural households in 63 provinces and cities with a length of years, a total of 4774 observations established by connections between the above datasets Model and variables The regression model of array data to assess the impact of the industry-service development on agricultural profits of households in this study has the following form: labor product ¿=β + β hhage¿ + β hh¿¿ ¿+ β3 pesticides¿ + ci +u¿ ¿ In which, i and t are cross-unit (household) and time (years), c i are unobserved individual characteristics of agricultural households and u¿ is false random number The variables in the specific model are as follows: larbor product: is the labor productivity - a dependent variable, which is identified by the total income from farming divided by total labor In which income is the revenue from rice, crops, industrial crops, and perennial plants, fruit plants and other revenue from farming hh age: is a dummy variable to classify household head’s age in terms of instinct groups, namely, under 30 (years old), 30-45, 41-60, and from 61 This is expected to be relative to the labor productivity, in detail, with an older household head means an experienced farmer, so he might know house to farming effectively and know to make advantage of other factors hh¿ ¿: is the number of members in a certain household This factor is expected to be positive relative to labor productivity, the bigger size of the household the higher the labor productivity of that household, and more members are expected to have a bigger ability to work or help in farming But there is a scratch that, it is helpful when the members in that household are adults, in other scenery, if there is a big household with a number of children and the old more than the employers so it will have a negative effect on labor productivity pesticides: is calculated by dividing the total expenditure (measured by thousand VND) by total arable land measured by square meter Since a higher expenditure implies higher labor productivity, the total amount spent on pesticides is anticipated to have a positive relationship with labor productivity Since labor can perform other tasks without having to expend energy applying manual insecticides, labor productivity is expected to increase Econometrics Assignment Page of 15 Group | FE62A Table 1: Descriptive statistics of independent variables Variable | Obs Mean Std dev Min Max -+ ln_nsld | 4,744 8.749264 1.555926 1.609438 13.29632 hh_age_ | 4,930 2.792089 806231 hh_size_ | 4,930 4.006694 1.561661 12 pesticies_ | 4,466 8.180229 87.26383 2612.5 -+ - Source: Author's calculation based on the data set using Stata software According to descriptive statistics, the hh_size variable's mean value is roughly with a relatively low spread of about 1.56, so we can say that on average each household has members The pesticide variable’s mean is about 10.14 with a relatively big spread of about 108.96, this might imply how the difference in pesticide expenditure of each household, there might be some households spend a lot on pesticides and there might some households spend a little on this factor The effect model fixed is more appropriate, according to the Hausman test, and the model also has issues with the variable error variance (see Appendix and 2) As a result, we employ the Robust Standard Error Method Error) by the White effect estimate technique with fixed dynamics and standard error correction (1980) The results estimated are shown in Table Table 2: Effects of household factors (such as the age of household head, number of members of the household, and total expenditure on pesticides) on labor productivity of the households: Fixed-effects (within) regression Number of obs = 4,382 Group variable: idho Number of groups = 2,421 R-squared: Obs per group: = 0.0288 = Between = 0.0001 avg = 1.8 Overall = 0.0006 max = F(5,2420) = 11.23 Prob > F = 0.0000 Within corr(u_i, Xb) = -0.2093 Econometrics Assignment Page of 15 Group | FE62A (Std err adjusted for 2,421 clusters in idho) -| Robust ln_nsld | Coefficient std err t P>|t| [95% conf interval] -+ -hh_age_ | | 4445385 2203514 2.02 0.044 0124415 8766355 | 7272451 2449473 2.97 0.003 246917 1.207573 | 9622134 2655801 3.62 0.000 4414255 1.483001 hh_size_ | -.1507913 0261457 -5.77 0.000 -.2020615 -.0995211 pesticies_ | 0003562 0001428 2.49 0.013 0000762 0006361 _cons | 8.687403 242912 35.76 0.000 8.211065 9.16374 | -+ -sigma_u | 1.5856532 sigma_e | 8886598 rho | 76098266 (fraction of variance due to u_i) ln_nsld Coefficient P>|t| hh_age 4444705 0.044 (**) 7273362 0.003 (***) 9618307 0.000 (***) hh_size -.1506807 0.000 (***) pesticides 0002958 0.010 (**) _cons 8.686463 0.000 (***) (*) (**) (***): significance level at 10%, 5%, and 1% The estimated result presented in table shows that: The estimated coefficient of the variable hh_age is generally positive and significant at a 5% significant level with group 2, and 1% with groups and 4, which implies that a household with an older household head usually has higher labor productivity Group has the biggest effect on labor productivity, group works more efficiently than group 2, and group is less efficient This is reasonable since older household heads have more experience and can make advantage of the sources of labor Econometrics Assignment Page 10 of 15 Group | FE62A The hh_size’s estimated coefficient is negative, with 1% off significant level, which means the bigger the household size is the lower labor productivity it can achieve, this can be explained, at least in this situation with our data, even though the household is big but the number of employers in the household is much less than the number of children or the old people who don’t have the ability to work on the farm 10% is the significant level of the pesticides’ estimated coefficient A positive relationship between the expenditure on farming of the household implies that the more money spent on pesticides the higher labor productivity it is But with a small estimated coefficient that means it has a small positive impact on labor productivity than the hh_age variable Conclusions and recommendations Fixed-effects (within) regression Number of obs = 4,382 Group variable: idho Number of groups = 2,421 R-squared: Obs per group: = 0.0288 = Between = 0.0001 avg = 1.8 Overall = 0.0006 max = F(5,1956) = 11.59 Prob > F = 0.0000 Within corr(u_i, Xb) = -0.2093 -ln_nsld | Coefficient Std err t P>|t| [95% conf interval] -+ -hh_age_ | | 4445385 1790463 2.48 0.013 0933968 7956802 | 7272451 2001565 3.63 0.000 3347028 1.119787 | 9622134 2205675 4.36 0.000 5296413 1.394785 hh_size_ | -.1507913 025534 -5.91 0.000 -.200868 -.1007147 pesticies_ | 0003562 0002157 1.65 0.099 -.0000669 0007792 _cons | 8.687403 2015181 43.11 0.000 8.29219 9.082615 | -+ -sigma_u | 1.5856532 sigma_e | 8886598 rho | 76098266 Econometrics Assignment (fraction of variance due to u_i) Page 11 of 15 Group | FE62A -F test that all u_i=0: F(2420, 1956) = 4.86 Prob > F = 0.0000 Appendix 1: Hausman test for model selection between FE and RE (b) (B) (b-B) sqrt(diag(V_b-V_B)) fe re Difference 4445385 3241943 1203442 1248839 7272451 3795182 3477269 1512051 9622134 2984082 6638052 1716593 hh_size -.1507913 -.0698371 -.0809542 0196522 pesticides 0003562 0007 006 -.0003445 000084 Test of H0: Difference in coefficients not systematic Std err hh_age chi2(5) Prob > chi2 = (b-B)'[(V_b-V_B)^(-1)](b-B) = 52.33 = 0.0000 Appendix 2: Verification of variance of variable error Modified Wald test for groupwise heteroskedasticity in fixed effect regression model H0: sigma(i)^2 = sigma^2 for all i chi2 (2421) = 1.3e+36 Prob>chi2 = 0.0000 This study has provided empirical evidence confirming the positive role of local service– agriculture development in the labor productivity of rural households in Vietnam in the period 2014 – 2016 This result is consistent with recent empirical studies in Vietnam as well as studies on the role of the industry - services for agriculture in transition economies around the world As a country in the process of industrialization and modernization, the growth of the industry-service sector in many localities of Vietnam has created a huge difference in Econometrics Assignment Page 12 of 15 Group | FE62A labor productivity compared to agriculture The findings in this paper suggest that productivity disparity is an important growth lever for agriculture during industrialization Prioritizing policies to support the development of industry and services in localities, especially in underdeveloped localities is really necessary to create a driving force for agricultural activities through the positive role of industrial development on inputs as well as outputs of the agricultural sector From the estimated results, it is shown that the more and more pesticides are used, the more productive they will be in agriculture, but if they are used widely and without a plan, they will be harmful to the environment, carcinogenic, or potential human health risks Moreover, the market is increasingly difficult to test and compete for green and clean products, products that are harmful to health will soon be eliminated and not favored by consumers Therefore, our group has proposed a few solutions as follows: - Planning for collection and gathering of used pesticide packaging and bottles: this is one of the solutions with a great impact on reducing rural environmental pollution - Eco-technology can also be applied to control pests in the field, reducing the use of pesticides - Inspect and guide the use of pesticides in vegetable production areas in the city to ensure the safety of pesticide residues on vegetables - In addition to checking the use of pesticides in the field, also instruct people on the techniques of using pesticides according to the correct principles: Right drug, Right time, Right concentration and dosage, and Right way; ensure the isolation period before harvesting Besides, in order to continue to increase labor productivity and maintain a high rate of labor productivity growth in agriculture, in the coming years, the State needs to implement policies for the agriculture, forestry, and fishery sectors in order to increase investment in production and business, scientific and technological innovation, and application of 4.0 technology in all fields Firstly, perfecting mechanisms and policies in agriculture, encouraging the application of science and technology to improve productivity in the direction of modernity, Econometrics Assignment Page 13 of 15 Group | FE62A sustainability, and large-scale commodity production on the basis of comparative advantages of each country localities, each industry in agricultural production Secondly, improving the quality of human resources in agriculture, promoting vocational training for rural workers in association with job creation, and contributing to improving the quality of human resources to serve the cause of industrialization and modernization modernization of the country Third, improve the level of organization, management, and efficient use of resources in agricultural production: Develop policies to accumulate land to serve the restructuring of the agricultural sector Improving labor productivity is an important aspect of the growth of a country Economic transformation in agriculture such as increased mechanization, and adoption of advanced technologies including information and communication technologies, would reduce the labor-dependence in agriculture-related work Technical efficiency in agricultural production fosters agricultural labor productivity (Giannakis 2013) This will help reallocation of labor that is concentrated in the agriculture sector towards other sectors stimulating overall economic growth However, the aging population phenomenon poses further challenges to the economic growth (Yoshino et al 2019) of developed and developing nations, including the agriculture sector It is better for education and health care to support the generation of workers to continue their contribution to increase the labor productivity further and thus the overall economic development Econometrics Assignment Page 14 of 15 Group | FE62A REFERENCES Gollin, D., Lagakos, D., & Waugh, M (2011), ‘The Agricultural Productivity Gap in Developing Countries’, Unpublished manuscript Elkins, E.R (1989) Effect of commercial processing on pesticide residues in selected fruits and vegetables Journal of the Association of Official Agricultural Chemists 72(3): 533– 535 McCauley, L.A., Anger, W.K., Keifer, M., Langley, R., Robson, M.G & Rohlman, D (2006) Studying health outcomes in farm worker populations exposed to pesticides Environmental Health Perspectives 114 (3): 953-960 DOI: https://doi.org/10.15549/jeecar.v7i1.355 Diyesperov, V (2003) Productivity of Labor in Agriculture Economy of Ukraine 11, 61-68 (Original work written in Ukrainian) Herrendorf, B & Schoellman, T (2015) Why is measured productivity so low in agriculture? Review of Economic Dynamics, 18 (4), 1003-1022. https://doi.org/10.1016/j.red.2014.10.006 DOI: https://doi.org/10.1016/j.red.2014.10.006 OECD Trends in agricultural productivity and sustainability performance http://www.oecd.org/agriculture/topics/agricultural-productivity-and-innovation/ Date of access: 13.03.2019 The impact of rural laborer migration and household structure on household land use arrangements in mountainous areas of Sichuan Province, China Habitat International (2017) Altieri MA (1995) Agroecology: the science of sustainable agriculture, 2nd edn Westview Press, Boulder, CO UNCTAD (2015): Agricultural Productivity: Developments, Determinants and Impacts Chapter In: The Least Development Countries Report 2015 – Transforming Rural Economies pp 39-75 United Nations Conference on Trade and Development, New York and Geneva Nguyễn Đình Hợi (chủ biên) (2017): “Kinh tế nơng nghiệp”, Nxb Tài chính, Hà Nội Trung tâm Thơng tin Dự báo kinh tế - xã hội Quốc gia (2017) “Năng suất đổi sáng tạo kinh tế Việt Nam: Phát từ nghiên cứu thực chứng”, Hội thảo quốc tế Đỗ Xuân Tất (2020) “Nông nghiệp, nông dân, nông thôn Việt Nam chuyển đổi phát triển”, Báo Nhân dân Econometrics Assignment Page 15 of 15 Group | FE62A