In this paper, we have used a longitudinal database of Vietnamese children to investigate the impact of crop and health shocks on child education in rural Vietnam. We explicitly take into account borrowing constraints and investigate the different effects of shocks on constrained and non-constrained households. Our empirical analysis provides further evidence on the role of borrowing constraints in transmitting the effect of shocks. While non-constrained households are able to smooth away the adverse effect of shocks without any consequences for child education, the effect of shocks falls disproportionately on children from borrowing-constrained households, which have limited ability to cope with temporary income losses. We find that shocks can affect both the quantity and quality of education, especially for children from poor and constrained households. Shock-affected households not only withdraw children from school, but they also sharply reduce their spending on child education and decrease children’s study time out of school. The reductions in educational expenditure and study time may affect children’s performance at school and are likely to cause grade repetition and leaving school early.
Nguyen Tien Dung. Young Lives Working Paper 94. Shocks, Borrowing Constraints and Schooling in Rural Vietnam. Young Lives, Department of International Development at the University of Oxford, Oxford, UK (2013) 34 pp. ISBN 978-1-909403-07-9