An explanation for vietnams recent migration pattern based on cumulative causation theory and relative deprivation theory

UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM ERASMUS UNVERSITY ROTTERDAM INSTITUTE OF SOCIAL STUDIES THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS AN EXPLANATION FOR VIETNAM’S RECENT MIGRATION PATTERN BASED ON CUMULATIVE CAUSATION THEORY AND RELATIVE DEPRIVATION THEORY BY Vu Thu Ha MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, DECEMBER 2017 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS AN EXPLANATION FOR VIETNAM’S RECENT MIGRATION PATTERN BASED ON CUMULATIVE CAUSATION THEORY AND RELATIVE DEPRIVATION THEORY A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By Vu Thu Ha Academic Supervisor: Prof Dr Nguyen Trong Hoai HO CHI MINH CITY, DECEMBER 2017 DECLARATION I hereby declare that this thesis paper entitled “An explanation for Vietnam’s recent migration pattern based on cumulative causation theory and relative deprivation theory” has been written by me, representing the result of my own work, in compliance with the guidelines and disciplines of Vietnam Netherlands Programme The contribution of my supervisor and collaboration with others, specified in the acknowledgement, to fulfill this research are consistent with normal supervisory practice This dissertation, or any substantial part of this dissertation, has not been submitted for any previous qualifications or any other institutions Date: 01 December 2017 Signature: _ Full name: Vu Thu Ha i ACKNOWLEDGEMENT It is impossible for me to finish my thesis without the guidance from my supervisor, Prof Dr Nguyen Trong Hoai, knowledges provided by Vietnam Netherlands Programme, help from my classmates and supports from my family First and foremost, I would like to send my special thanks to my supervisor, Prof Dr Nguyen Trong Hoai, who is always ready to steer me to the right direction, to give me useful advices when I have trouble with my research and to motivate me to explore my ability I am so grateful for all of his dedication and devoted attention in every single step in my journey of conducting this research Having a chance to work with him is really an unforgettable experience in my life I would also like to thank Dr Pham Khanh Nam, Dr Truong Dang Thuy and all other lectures and mentors from Vietnam Netherlands Programme for their valuable lessons, guidance and knowledge that they shared to me throughout the program I appreciate all of wonderful experience and fantastic friends in class VNP22 that I’m luckily obtained thanks to attaining this course Last but not least, I must express my profound gratitude to my family for providing me unconditional supports and unceasing encouragement that I can pursue my learning desire From bottom of my heart, I want to say thank you all ii ABSTRACT This paper combines cumulative causation theory and relative deprivation theory to explain incentives and influences on decision to send migrants of a household, concerning interaction of the household’s characteristics, especially factors related to income, and the features of the origin community Two subsets of data from two successive Vietnam Household Living Standards Surveys (VHLSS) in period from 2010 to 2014 are established and employed to avoid endogeneity in the analysis of migration pattern in Vietnam in 2012 and 2014 By using logit method and combination of difference-in-difference (DID) and propensity matching score method (PSM), we find some interesting results that have never been found in previous empirical studies for Vietnam case First, the competitiveness competence level of the origin province may reduce possibility of work migrants Furthermore, relative income status before migration event, represented by ratio of income per capita of a household over the average income per capita in the origin province, may positively affect the possibility of sending migrants of the household Then, returns from migration, could create a significantly positive effect on the relative income status of the household at the origin via remittance channel, generating an automatic mechanism in migration progress as expected in the cumulative causation theory Keywords: migration, cumulative causation theory, relative deprivation, remittance, relative income, PCI JEL classification: O15, F24, D31 iii TABLE OF CONTENTS I INTRODUCTION 1.1 Problem statement 1.2 Research questions 1.3 Research objectives 1.4 Data and methods 1.5 Thesis structure II LITERATURE REVIEWS 2.1 Migration theory reviews 2.2 Relative deprivation theory 15 2.3 Remittance – the link between the migrants and their origin 17 2.4 Conceptual framework 18 2.5 Empirical studies 21 III METHODOLOGY 26 3.1 The dataset 26 3.2 Main applicable concepts 27 3.3 Stage one: examining determinants of migration 29 3.3.1 Model 29 3.3.2 Variables 31 3.4 IV Stage two: testing effects of migration 32 RESULTS AND DISCUSSION 35 4.1 Determinants for migration in Vietnam in 2012 and 2014 35 4.2 Impacts of migration on income and expenditure in Vietnam in 2012 and 2014 50 V CONCLUSION 60 5.1 Main findings 60 5.2 Policy implication 62 5.3 Limitation of the study 63 REFERENCES 64 APPENDIX 68 Annex 1: Descriptive statistics of explanatories in year 2010 68 Annex 2: Descriptive statistics of explanatories in year 2012 71 iv LIST OF FIGURES Figure 1: A general framework of migration decision making 10 Figure 2: The conceptual framework for the migration pattern in relation with the relative income status of a household and the origin community 21 Figure 3: Difference-in-Difference estimation, graphical explanation 33 v LIST OF TABLES Table 1: Logit regressions of determinants of migration in period 2010-2012 36 Table 2: Logit regressions of determinants of migration in period 2012 -2014 42 Table 3: Impact of migration on income and expenditure in 2012 52 Table 4: Impact of migration on income and expenditure in 2014 55 vi ABBREVIATION DID Difference-in-Difference PCI Provincial Competitive Index PSM Propensity Matching Score US or USA The United States of America VHLSS Vietnam Household Living Standards Survey VMS Vietnam Migration Survey VNDHS Viet Nam Demographic and Health Survey VNMHS Viet Nam Migration and Health Survey WTO World Trade Organization vii I INTRODUCTION 1.1 Problem statement According to Migration Policy Institute (MPI), an independent, non-partisan, non-profit think tank of specialists and analysts on migration field, the year 2016 is a remarkable one for the migration worldwide Notably, the upheavals in the political and economic situation of powerful nations and affiliates lead to a dramatic crisis in movement of capital and labor around the world For example, the European migrant crisis began in 2015 with significantly increase of immigrants and refugees arrived in the European Union As stated by The New York Times, there are over 123,000 migrants landed in Greece in the two first months of 2016, which is more than twenty times greater in comparison with the same period of 2015 This fact challenges authorizes and policy-makers in the European Union to take prompt actions and provide relevant policy to better manage immigration issues and protect the living standard of native people In the United States of America, one of the most powerful country in the world, the new president, Donald Trump, takes office, pledging a fasten immigration policy in the US that including a crackdown on illegal immigration, construction of border walls, reductions in refugee and immigrant admissions, and greater screening of newcomers All of these facts and actions in the last recent years illustrate for the increasing importance meaning of migration problem in association with the socio-economic situation The report of the World Trade Organization (WTO, 2008) notices the first explosion of migration happened in the 1950s as the consequence of the World Wars, then gradually increasing before booming in the latter half of the 20th century Castles, De Haas, and Miller (2013) describe the general patterns of International population movements in the modern world as globalization of migration relating to the diversification of sending countries and the spread in spectrums of economic, social and cultural background; having changes in the direction of dominant For work migration purpose, the data within years 2010 and 2012 significantly shows the Average Treatment effect on the Treated (ATT) in income per capita of household is about 3.5 million VND, equivalent to a growth of 25% This result refers the relative increase in income per capita of the treated household in 2012, compared to their counterpart who was obtained significantly higher per capita income before the event of migration in period from 2010 to 2012 Especially, the ATT in remittance per capita also significantly improve at about 2.8 million VND, occupied for more than 80% in improvement of income per capita in treated household However, there’s no statistically significant evidence for difference in consumption per expenditure of household or average income per capita in the province in this period As a consequence, the relative income status of the treated family has been promoted, at the significance level of 1% On other hand, unlike work migrants, the non-work migrants are reasons for remarkable addition of approximately 35% in consumption expenditure per capita Perhaps, the possible explanation for this situation is that the non-work migration purposes normally are for education or marriage; and the family has to pay tuition fee or subsidy for the wedding in these cases, leading to the increase of expenditure It’s noted about evidence for relative reduction in average income per capita of the origin community having household with migrants, especially non-work migrant The predicted reason for this phenomenon is due to migration may create mitigation in the local labor force The effects of migration in general or for non-work purposes on other indicators have much similarity to the case of work migration The results imply for a hidden impacts of income on migration for initial non-work purposes in Vietnam Additionally, the results for the same event study on dataset of VHLSS 20122014, presented in Table 4, show very consistent impacts of migration for different purposes These results provide supportive evidence for the hypothesis in the second stage of migration, which stated that migration have significant influences on both absolute income and relative income status of the household In associated 59 with the results in the first stage, it is possible to conclude that migration is a selffeeding process as mentioned in the cumulative causation theory of migration via reversal effects of income V CONCLUSION 5.1 Main findings As Vietnam is not outside the continuously increasing trend of migration in all over the world, further understanding related to migration is necessary We conduct the research on different motivations of migration, using data set of VHLSS in different periods of time, 2010-2012 and 2012-2014, to investigate the determinants and impact of migration in Vietnam By applying techniques of both logit regression and combination of difference-in-difference (DID) and propensity matching score method (PSM), we examine whether migration pattern in Vietnam is supported by cumulative causation theory and relative deprivation theory At first, the regression results show that initial purpose of migration may alter incentives and outcomes of decision making process for movement of members in a household For example, education of household head could positively affect the existence of non-emigrant; it is not a remarkable factor in work migration cases This distinction is quite similar to findings of C V Nguyen et al (2011) which studied migration pattern in Vietnam using VHLSS 2004 and 2006 The evidence for concave relationships between likelihood of sending migrants in a household and income level or age of household head is also found as referred in another research using VHLSS data from 2004 to 2006 of T P Nguyen et al (2008) Notably, the advanced points of this paper, compared to other studies at migration in Vietnam, are not only at updated datasets but also on findings regarding potential linkage of PCI at the origin area, which is a macro index representing competitiveness in business environment of a province, and the possibility to migration The regression results indicate that competitiveness competence of the origin province may reduce possibility of work migrants but 60 having no significant effect on decision of sending non-work migration of the household More interestingly, the investigation shows evidence for undeniable role of relative income status of the household, measured by ratio of income per capita of household compared to average income per capita in the origin province, in migration process as mentioned in the relative deprivation theory and cumulative causation theory on migration Notwithstanding no optimal form presenting relationship between possibility to send migrants and relative income status is specified when examining two datasets constituted from data of three continuous VHLSS terms, it is possible to recommend that relative position in terms of income per capita of household in the origin province may positively affect the possibility of migration decision of household This result provides evidence proving a significant relationship between the movement decision of household and their relative income status at the origin community as in the hypothesis of relative deprivation Next, the crucial determinants of migration found at the first stage will be employed in the second stage as elements to match household engaged in migration, namely “treated group”, with the counterfactual one which having no migrants at the research time, called “ matched control group”, by using propensity matching score method Then, the real outcomes related to earnings and expenditures, which originated from migration, could be revealed by comparison the treated household against its counterpart before and after the event of migration The difference-indifference results concerning households properly sending work-migrants, nonwork migrants and migrants in general show that migration is able to create significant improvement in household per capita income, remittance, consumption expenditure, and especially, their income status Thanks to these consequences, the second research question could be answered Returns from migration, particularly in situation of an emerging country like Vietnam, may create a significantly positive effect with respect to the relative income status of the household in the province, as a reference group, via remittance channel that is in accordance with the expectation 61 in the cumulative causation theory Moreover, in combination with results from the investigation of the first stage to determine factors affected decision of household to send migrants for different purposes, it is possible to conclude that migration has an automatic mechanism once it happened as predicted in the cumulative causation theory (Douglas S Massey, 1990; Stark & Taylor, 1989; Stark et al., 1986; J E Taylor, 1992) 5.2 Policy implication Since this investigation found the distinction of determinants on different purposes of migration, it is suggested that particular policies should be designed for better management of these groups of migrants For example, if the authorities would like to prevent household from sending work migrants, instead of applying negatively challenging policies, they can put more efforts in enhancement of administrative and legal procedures to create a favorable and competitive business environment to attract investment, generating more employment opportunities for local residents Furthermore, as relative deprivation may affect to migration decision, especially for non-work migration which occupies a majority part in migration pattern in Vietnam, the authorities should pay more attention on improvement of local infrastructures, public and social services, such as healthcare and education, to increase satisfaction of local people on their standards of living, reducing motivation of non-work migration Thereby, the local consumption is leveraged, leading to increase in local GDP, creating more jobs and welfares for poorer migration is also better off Finally, this research is hopefully contributing a work to the literature of migration in Vietnam or emerging countries in general The study results may provide implication for policy makers to pay more attention into migration pattern not only in terms of absolute value but also relative one Moreover, it is suggested that if the authorities can establish a relative equal society, especially in terms of 62 living standards, they may control the development of migration and mitigate its negative impacts 5.3 Limitation of the study In addition, this research is inevitably having some limitations, such as selection of proxy variable for relative income position of household in the reference group is based in related empirical study, instead of a theoretical basis; or not conducting investigation in a bigger scale and longer period of time In addition, as the restricted information in the dataset and the purpose of studying, this research only examines migration in different groups of movement initial purposes In fact, there are many other ways to classify migration, such as internal and international migration or four directions of movement between rural and urban areas Furthermore, even if the relationship between relative income per capita of household compared to the average income per capita of the province and the possibility of migration in that area is significantly 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others=1) Household size Age of household head Gender of household head (male = 0, female = 1) Head lives with spouse (yes = 1) Head completed technical degree or post-secondary degrees Head’s spouse completed technical degrees or postsecondary degrees Ratio of members with technical degrees to total household members Ratio of members with postsecondary degrees to total household members Ratio of members younger than 15 to total household members Ratio of members older than 60 to total household members Ratio of female members to Household with non-work migrants mean max Household with work migrants mean max Household having migrants mean max 0.18 0.11 0.17 4.91 50.49 21 15.00 99.00 4.81 51.98 2.00 25.00 15.00 85.00 4.85 50.66 21 15.00 99.00 0.22 0.24 0.22 0.84 0.80 0.83 0.19 0.15 0.18 0.11 0.07 0.10 0.05 0.04 0.67 0.05 0.09 0.09 0.80 0.09 0.15 0.67 0.13 0.60 0.15 0.67 0.07 0.07 0.67 0.07 0.52 0.49 0.51 69 Variables total household members Household area per capita (m2) House made of Permanent materials House made of semipermanent materials House of Temporary Materials Annual crop land (m2) per capita Perennial crop land (m2) per capita Forestry land (m2) per capita Agriculture surface (m2) per capita Gardens, ponds near resident area (m2) per capita Number of observations Household with non-work migrants mean max Household with work migrants mean max Household having migrants mean max 17.71 100.00 16.00 3.33 80.00 17.61 100.00 0.85 0.81 0.84 0.13 0.16 0.14 0.02 0.03 0.02 416.84 13,000.00 366.23 16,550.00 413.87 16,550.00 271.82 20,000.00 238.83 11,250.00 257.77 20,000.00 85.95 16,666.67 50.68 5,000.00 84.08 16,666.67 26.03 7,666.67 47.79 1,666.67 27.87 7,666.67 25.42 1,666.67 39.13 1,200.00 27.42 1,666.67 929 208 70 1075 Annex 2: Descriptive statistics of explanatories in year 2012 Variables Income per capita (in logarithm) Remittance per capita (in logarithm) Relative incomes status rural =0, urban =1 Provincial Competitiveness Index (PCI) Nearby enterprises, factories or traditional occupation villages (yes =1) Red River Delta Midlands and Northern Mountainous Areas Northern and Coastal Central Region Central Highlands Southeastern Area Mekong Delta Ethnic Minorities ( Kinh = 0; others=1) Household size Age of household head Household with non-work migrants mean max Household with work migrants mean max Household having migrants mean max 9.87 7.84 13.57 9.85 7.96 12.04 9.87 7.84 13.57 5.97 1.72 10.66 6.02 1.72 10.71 5.97 1.72 10.71 1.06 0.70 0.12 29.10 1.04 0.79 0.14 6.37 1.07 0.71 0.12 29.10 56.95 45.12 63.79 57.19 45.12 63.79 57.04 45.12 63.79 0.47 0.51 0.47 0.22 0.25 0.21 0.18 0.15 0.17 0.27 0.25 0.27 0.07 0.08 0.18 0 1 0.04 0.04 0.26 0 1 0.06 0.08 0.20 0 1 0.17 0.17 0.17 4.62 50.39 19.00 11 90.00 4.32 49.85 2.00 19.00 9.00 80.00 4.56 50.47 19.00 11 90.00 71 Variables Gender of household head (male = 0, female = 1) Head lives with spouse (yes = 1) Head completed technical degree or post-secondary degrees Head’s spouse completed technical degrees or postsecondary degrees Ratio of members with technical degrees to total household members Ratio of members with postsecondary degrees to total household members Ratio of members younger than 15 to total household members Ratio of members older than 60 to total household members Ratio of female members to total household members Household area per capita (m2) House made of Permanent Household with non-work migrants mean max Household with work migrants mean max Household having migrants mean max 0.21 0.22 0.21 0.83 0.82 0.83 0.16 0.13 0.16 0.10 0.09 0.09 0.07 0.07 0.60 0.07 0.06 0.07 0.75 0.06 0.14 0.71 0.09 0.67 0.13 0.71 0.08 0.05 0.67 0.08 0.51 0.48 0.50 19.19 3.20 100.00 19.89 3.33 106.67 19.49 3.20 106.67 0.31 0.26 0.30 72 Variables materials House made of semipermanent materials House of Temporary Materials Annual crop land (m2) per capita Perennial crop land (m2) per capita Forestry land (m2) per capita Agriculture surface (m2) per capita Gardens, ponds near resident area (m2) per capita Number of observations Household with non-work migrants mean max Household with work migrants mean max Household having migrants mean max 0.62 0.63 0.62 0.07 0.11 0.07 711.75 15,666.67 871.91 8,720.00 740.85 15,666.67 236.03 15,000.00 139.44 7,500.00 218.88 15,000.00 11.09 7,500.00 0 9.96 7,500.00 57.45 10,368.00 1.78 280.80 51.63 10,368.00 2.98 1,084.00 12.33 1,266.67 4.63 1,266.67 887 158 73 987 ... generating an automatic mechanism in migration progress as expected in the cumulative causation theory Keywords: migration, cumulative causation theory, relative deprivation, remittance, relative. .. advance in migration theory J E Taylor and Fletcher (2001) declare that the NELM is the only migration theory that explicit the connection between migration and impact of migration via remittance... and expansion of the NELM, another school of migration theory has been formulated and improved to interpret the internal dynamics of migration, called cumulative causation Cumulative causation