Leaving unemployment of an individual, the impact of unemployed benefits and familys income

UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL HO CHI MINH CITY STUDIES VIETNAM THE HAGUE NETHERLANDS VIETNAM – NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS LEAVING UNEMPLOYMENT OF AN INDIVIDUAL: THE IMPACT OF UNEMPLOYED BENEFITS AND FAMILY’S INCOME By LE THI CAM NHUNG MASTER OF ARTS IN DEVELOPMENT ECONOMICS Ho Chi Minh City, December 2015 ABSTRACT This paper aims to analyze the determinants to affect the probability of having a job after a period of being unemployed of Vietnamese labor by using Vietnam household living standard survey The study covers 1,156 observations by filtering all people in labor age who were unemployed in 2010 to analyze their situation in 2012 Demographic characteristics of each person are focused in order to discover the reasons to help people find a job meanwhile the macroeconomics factors are considered to be unchanged Findings in this research emphasize that income of family, unemployed benefits, money spending for inpatient fee contributed to demotivate people in seeking a job On the contrary, higher education could be helpful for an individual to leave unemployed circumstance Keywords: unemployed people, determinants for having a job, income, education, fee i ACKNOWLEDGEMENT Foremost, I would like to sincerely thank Dr Pham Thi Bich Ngoc I am grateful to her enthusiastic instruction crucial advice and valuable guidance during the time I worked with this thesis In addition to this, I would like to express my respect and thank Dr.Truong Dang Thuy who gave me very useful advice and comments More special thanks to all professors and staff of Vietnam-Netherlands Program as well as classmate and Vietnam-Netherlands Program alumni Finally, I would like to thank you, my family, who motivated me with the master program and support me to finish this thesis ii ABBREVIATIONS GDP Gross Domestic Product VHLSS Vietnam Household Living Standard Survey Sd Standard deviation Coef Coefficient NBS National Bureau Statistics iii TABLE OF CONTENTS ABSTRACT i ACKNOWLEDGEMENT ii ABBREVIATIONS iii TABLE OF CONTENTS iv LIST OF TABLES vi LIST OF FIGURES vii CHAPTER 1: INTRODUCTION 1.1 Problem statement 1.2 Research objectives 1.4 Data and methodology 1.5 Thesis structure CHAPTER 2: LITERATURE REVIEW 2.1 Some definitions and concepts 2.1.1 Unemployment definition 2.1.2 Type of unemployment 2.1.3 Definition of leaving unemployment 2.2 Literature review 2.2.1 The influence of demographic characteristics on leaving unemployment 2.2.2 The impacts of unemployment benefits 2.2.3 Income and leaving unemployment 10 2.2.4 Health status and being unemployed 11 2.2.5 Summary of empirical researches about leaving unemployment 12 CHAPTER 3: DATA AND METHODOLOGY 15 3.2 Data description 15 3.3 Analytical framework 18 3.4 Econometric model 19 3.4.1 Modeling for probability of leaving unemployment 19 3.4.2 Econometric model in thesis 21 3.5 Data consolidation and list of variables 23 iv CHAPTER 4: SUMMARY STATISTICS, EMPIRICAL RESULTS, AND ANALYSIS 27 4.1 Overview of unemployment in Vietnam 27 4.2 Statistics summary 28 4.2.1 Unemployed benefits 28 4.2.2 Expenditure for healthcare 28 4.2.3 Family income 29 4.2.4 Demographic characteristics 30 4.3 Regression and analysis 32 4.3.1 Empirical result 32 4.3.2 T-test for significant statistics variables 38 4.3.3 Descriptive statistics for type of jobs of employed people 40 CHAPTER 5: CONCLUSION AND POLICY IMPLICATION 46 5.1 Some findings 46 5.2 Policy implications 48 5.3 Limitations 49 REFERENCES 50 APPENDICES 54 v LIST OF TABLES Table 3.1: List of variable in unemployed benefits group Table 3.2: List of variables in health status group Table 3.3: List of variables in family income group Table 3.4: List of variable in demographic characteristics group Table 4.1: Summary of unemployed benefit variable in 2012 Table 4.2: Summary of expenditure for healthcare in 2012 Table 4.3: Summary of family income variables in 2012 Table 4.4: Summary of age variable Table 4.5: Determinates of unemployment leaving 2010 and 2012 Table 4.6: the role of partnership, gender, and unemployed benefits Table 4.7: T-test for medical internal fee of 2012 Table 4.8: T-test for income of household in 2010 Table 4.9: T-test for unemployed benefits in 2012 Table 4.10: T-test for income by property in 2012 Table 4.11: Job types of employed individual in 2012 Table 4.12: the average working hour per days of employed people in 2012 Table 4.13: the average working days per months of employed people in 2012 vi LIST OF FIGURES Figure 3.1: The relationship between leaving unemployed and individual’s factors Figure 4.1: Exit rate out of unemployment by gender Figure 4.2: Marital status of unemployed group in 2010 and 2012 Figure 4.3: Marital status of employed group in 2010 and 2012 Figure 4.4: The status of signed labor contract of employed individuals in 2012 Figure 4.5: The status of obtaining unemployment insurance of employed individuals in 2012 vii CHAPTER 1: INTRODUCTION 1.1.Problem statement Unemployment has brought a lot of consequences to not only the economy but also the society and individuals (Layard et al, 2005) First of all, a higher payment that this phenomenon can cause to the society is insurance, pension, subsidiary as well as resulting a waste of human resources In addition, gross domestics product might drop because individuals faced with the unemployed situation Secondly, in the situation of jobless and less income, it is easier for an individual to turn to crime to meet financial needs This action could result in an unstable situation and slow development for society (Jensen et al, 2003) Under the pressure of earning money for surviving, people are easier to get the sickness and health problems Furthermore, some people who could not suffer from unstable circumstances and they did wrong behaviors such as suicide or disregarding themselves and lives On the other hand, a good work could make an individual to develop their skills as well as have some money to save for family and their activities, the better job people get, the most satisfied people feel in their lives (Drobnič et all, 2010) Hence, the unemployed situation of an individual could be explored deeply to find a solution to decrease such an issue In addition, time to find a job should be reduced to prevent demotivation for people in the time of waiting According to data from General Statistics office, the unemployment rate of Vietnam is quite low at 1.96 % in 2012, this number increased and reached 2.1% in 2014 Nevertheless, this rise is not critical Although the unemployment rate is low, the rate does not really reflect the overall picture of labor employment because of some following reasons Underemployment is not reflected in the overall unemployment rate (Fields,1975) Besides, that laborers who are on the way to quit the job and find a new one are not mentioned From any point of view, unemployed situation matter for government, economist and each person In the case of Vietnam, during the period from 2009 to 2010, Vietnam had lost half million and one million jobs in 2009, 2010 respectively due to economics slowdown (Cuong, 2010) This event could threaten the development of society as well as living standard of citizens Hence, it is necessary to find out the solutions to reduce the unemployed situation to help employee and family release burden of physical needs Researchers studied on the impacts of economic recession to labor market and REFERENCES Nickell, S (1979) Estimating the probability of leaving unemployment Econometrica: Journal of the Econometric Society, 1249-1266 Kupets, O (2006) Determinants of unemployment duration in Ukraine Journal of Comparative Economics, 34(2), 228-247 Van den Berg, G J., & Van der Klaauw, B (2001) Combining micro and macro unemployment duration data Journal of Econometrics, 102(2), 271-309 Hunt, J (1999) Determinants of non-employment and unemployment durations in East Germany (No w7128) National Bureau of 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