THE POTENTIAL EMIGRATION OF VIETNAMESE SKILLED LABOUR FORCE AFTER THE ESTABLISHMENT OF ASEAN ECONOMIC COMMUNITY IN 2015

THE POTENTIAL EMIGRATION OF VIETNAMESE SKILLED LABOUR FORCE AFTER THE ESTABLISHMENT OF ASEAN ECONOMIC COMMUNITY IN 2015VO NGOC DAN THANH,B.A in INTERNATIONAL ECONOMIC RELATIONSADVISOR: Dr. HUYNH THI THUY GIANG

Ho Chi Minh City, 5/2015

CONTENTS

ModelDeterminantsSjaastad (1962)Age : young people are more likely to migrateEducational level: people with better education are more likely to migrateFamilys relation: people who consider migration as a households decision are less likely to migrate.Harris - Todaro (1970)Wage incentive: migrants move from lower income areas to higher onesHatton (1995)GDP gaps: difference in national GDP cause migrationUnemployment rates: workers at a high unemployment rate area tend to change to lower unemployment ones. Hong (2006)Trading relation between the host and the home countryPasadilla (2011)Social security: the ability to ascertain some prerequisites such as housing, job, contract security would encourage migration

Internal Migration in Vietnam: Intensity and Driving Forces

intensity = cng driving forces = cc yu t nh hng4

Trends of interprovincial migration rates (migrants per 1,000 people) over time by gender and age groups.Source: Long & Phuong (2013), The rural urban migration processThe shifting trend in migration

Axis x: 1994 1999Axis y: 2006 2007 City/ Urbanized ProvinceSource: Duc & Thinh (2008)

Wage disparities between rural and urban areas in Vietnam as a determinant of migrationSource: Population & Housing Census 2009These trends, especially for rural to urban migration, are very similar to those in Thailand and in other Southeast Asian countries (3,32,33). The growth of interprovincial migrant populations has been fostered by economic development policies, lack of jobs in rural zones, lack of employees in urban areas, rapid urbanization, and the easing of policies that formerly restricted migration (15). These developments coincide with macroeconomic transitions that have led to notable economic growth and poverty reduction but with benefits inequitably distributed toward urban rather than rural areas (4). These trends have triggered contemporary internal migration flows and, in particular, interprovincial flows. Rural-to-urban flows put pressure on existing urban infrastructure and social services such as housing, health care, electricity, water, and sanitation (34,35).7

RESEARCH SURVEY:Model Proposal, Sample description and Descriptive statisticsLOGISTIC MODEL PROPOSALP(Yi = 1| Xi1, ....., Xim) = F(0 + 1Xi1 + 2Xi2 + ... + mXim ), where F(z) = 1/(1+exp(-z))F(z) is a logistic cumulative probability distribution functionThe impact of explanatory variable X on probability that Yi = 1 is described by marginal effect. For a continuous variable (like age) marginal effect is equal to change in predicted probability in due to unit change in X, while other variables are kept constant at their mean values. Sample Description FrequencyPercentValid PercentCumulative PercentValidOther55.05.05.0Male5959.059.064.0Female3636.036.0100.0Total100100.0100.0

Source: Calculation from the survey data (2015)Sample Description

Source: Calculation from the survey data (2015)Sample DescriptionSource: Calculation from the survey data (2015)Descriptive StatisticsSource: Calculation from the survey data (2015)Descriptive StatisticsPreparedness to moveWish to move and stayWish to move and consider stayingWish to move for limited period of timeTotalAccepts same qualification only60%74%64%67%Accepts lower qualification20%13%8.5%11%Accepts another profession20%13%27.5%22%Total100%100%100%100%Source: Calculation from the survey data (2015)Current net monthly wage or benefitRequired wage differential1400 USDTotalLess than 100 USD35007%100 - 200 USD550011%200 - 300 USD10131025%> 300 USD22314157%Total number of participants405451100%Descriptive StatisticsHousing and job security in the host country by preparedness to moveWish to move and stayWish to move and consider stayingWish to move for limited period of timeTotalNo requirements0%0%0%0%Housing only0%0%9%6%Job only25%17%37.5%30%Both job and housing75%83%53.5%64%Total100%100%100%100%Descriptive StatisticsSource: Calculation from the survey data (2015)Descriptive StatisticsRequired prerequisites to migrate by preparedness to moveWish to move and stayWish to move and consider stayingWish to move for limited period of timeTotalContract with an ASEAN employer100%83%65%71%Contract with ASEAN recruitment agency0%17%35%29%Total4100%100%100%Source: Calculation from the survey data (2015)Descriptive StatisticsPreferred destinationsSource: Calculation from the survey data (2015)Research ResultsExplanatory variablesCoef.t-valueMarginal effectbAge (coef. and marginal effect x 10)- 0.007- 0.80-0.007EducationHigh school diplomaBachelorMasterDoctor0.061-0.1550.831-0.4920.31-0.771.58-0.620.006-0.0170.064-0.062Net monthly incomeLess than 350 USD350 - 700 USD700 - 1400 USD0.8800.2830.4012.63***1.602.31**0.0750.0300.041Familys relation-0.310-2.13**-0.033Social security1.2933.42**0.083Research ResultsPredicted probability that a skilled worker decide to move to one of the ASEAN countries by age.Research ResultsPredicted probability that a skilled worker decide to move to one of the ASEAN countries by wage.Disproportional samplingNot explaining the decision of permanent or temporary migration

Limitations

POLICY RECOMMENDATIONS:Impacts summary and Recommended measuresImpacts summaryScenerioResultImpact typeLoss of young educated workersAging labour forceBrain drainNegativeReturn of migrants at retirement age.Aging populationSocial welfare burdenNegativeIntensive outflow of a particular sectorImbalance in sectorial economy NegativeDiffusion of new knowledgeTechnology know-howsFoster economic developmentPositiveRemittancesIncrease in foreign currency reservePositiveLabour force must be trained to be ready for learning and adapting to the new environmentInitiate intensive training for students to better prepare them for the upcoming future (which includes learning ability, adaptability, communication skills, awareness of AEC ...)

Supporting measures

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