CONSULTING PROJECT
School dropouts among Vietnamese children－How to ensure financial resources for education－1

Hitotsubashi University - School of International and Public Policy
Public Economics Program

Ma Kim Thanh – PM15E014

August, 2016

1

This paper has been submitted to Young Lives Viet Nam as the final report of the Consulting Project at
School of International Public Policy, Public Economics program, Hitotsubashi University. The views
expressed in this report are those of the author. They do not necessarily reflect those of Young Lives Vietnam
or the funders.

Abstract
Education is one of the best effective investment methods to develop the economy of
any country. However, especially in developing countries, income inequality has led tothe inequality in education access between poor and wealthier children. After an
overview on current situation of Vietnamese education in Section 2, the data of aninternational research program on child poverty called Young Lives will be used in
Section 3 to analyze the significance of poverty on the decision of school dropouts.
Section 4 analyzes the impacts of the financial support policies implemented by
Vietnamese government and non-government organizations on children’s school
attendance. Based on the analysis results and after taking account of international
experience on cash transfer program, this study would offer proposals to the policy
planners and the government of Vietnam on how to ensure the finance for poor children
to go to school with effective support policies.
Acknowledgements
Firstly, I would like to express my appreciation to Dr. Le Thuc Duc, the Principal
Investigator of Young Lives in Vietnam, based at the Centre for Analysis andForecasting, Vietnam Academy of Social Sciences for the instruction and the detailed
comments on this research. Thank you for your profound understanding on the matterand useful information you have been sharing during the time. I also deeply appreciate
the support and coordination of Young Lives Vietnam’s staffs that gave me an
opportunity to working with Young Lives Vietnam.
Secondly, I deeply appreciate Professor Shinji Yamashige, my academic advisor, who
has supported and instructed on my study during two years. Without the encouragement
and the teaching of Professor Yamashige, I could not have finished my research. I
would also like to thank Assistant Professor Izumi Yokohama for the instruction on
econometric analysis which has been new knowledge and skill with me before.
And many thanks to my classmates at IPP Public Economics Program for giving mevalued advice and support during my completion of this report.

Contents

Abbreviations
Glossary
1.

Introduction ................................................................................................................. 1

2.

Vietnam’s education situation..................................................................................... 2

3.

4.

5.

2.1.

Early childhood care and education .................................................................... 2

2.2.

Basic education (Primary education and lower secondary education)................ 3

2.3.

Upper secondary education ................................................................................. 4

Relationship between school dropout and financial issues ......................................... 4
3.1.

Expense for education ......................................................................................... 4

3.2.

Analysis of the link between school dropout and financial issues ...................... 8

3.2.1.

Description of the hypothesis, variables and the model ............................... 8

3.2.2.

Results of regression .................................................................................... 9

Solutions to the school dropout problem .................................................................. 12
4.1.

Financial support policies of government ......................................................... 12

4.2.

Analysis for the effectiveness of the financial support policies ........................ 16

4.3.

Policy recommendations ................................................................................... 20

4.3.1.

Recommendation –Lessons from Mexico’s experience ............................ 20

4.3.2.

Policy implications for Vietnam................................................................. 23

Conclusion ................................................................................................................ 26

BibliographyAbbreviations

ADB

Asian Development Bank

CCT

Conditional Cash Transfer

GER

Gross enrolment rate

GIR

Gross intake rate

GSO

General Statistics Office of Vietnam

MOET

Ministry of Education and Training

MPI

Ministry of Planning and Investment

NER

Net enrolment rateNGO

Non-government organization

NIR

Net intake rate

ODA

Official development assistance

UNDP

United Nations Development Program

UNESCO

UnitedNations

Educational,

Scientific

Organization

UNICEF

United Nations Children’s Fund

VHLSS

Vietnam Household Living Standard Survey

WB

World Bank

and

CulturalGlossary
Early Childhood care and education (ECCE): Services and programs that support
children’s survival, growth, development and learning – including health, nutrition andhygiene, and cognitive, social, emotional and physical development – from birth toentry into primary school.
Gross enrolment rate (GER). Total enrolment in a specific level of education,
regardless of age, expressed as a percentage of the population in the official age groupcorresponding to this level of education. The GER can exceed 100% because of early orlate entry and/or grade repetition.
Gross intake rate (GIR). Total number of new entrants to a given grade of primaryeducation, regardless of age, expressed as a percentage of the population at the official
school entrance age for that grade.
Net enrolment rate (NER). Enrolment of the official age group for a given level of
education, expressed as a percentage of the population in that age group.
Net intake rate (NIR). New entrants to the first grade of primary education who are of
the official primary school entrance age, expressed as a percentage of the population ofthat age.
Direct aid to education: Aid to education reported as direct allocations to the education
sector. It is the total of direct aid to basic education (covering primary education, basic
life, skills for youth and adults, and early childhood education); secondary education(including both general secondary education and vocational training).

1. Introduction
Education of children is a big issue in any country in the world. It is a human right andthe most effective way against poverty. According to UNICEF (2015), education is oneof the best economic investment methods, which results in an increase of 0.37% in GDP,rising to 1.0% with improved learning outcomes in each additional year of schooling.
However, in low and middle income countries, a large number of children leave school
before they finish their primary or low secondary education. This phenomenon is called“school dropout”. There are few studies that clearly define the “dropout” problem. In
general, dropout is a social phenomenon in which a person stops going to school orcollege before completing their studies. In fact, there are two concepts, “school dropout” and “out of school”, which have a little bit difference. “School drop-out” is anaction that a person has gone to school, but stopped before finishing that education level,
while “out of school” has wider meaning, that includes person who has gone to school,then dropped out and person who never has started schooling. The issue of “school
drop-out” will be focused in this consulting project.
In order to have a comprehensive look at childhood poverty in Vietnam, a long-term
international research study called Young Lives, has been implemented during theperiod of 15 years, involving 3000 children from five provinces in Vietnam. By
analyzing data obtained from Young Lives’ surveys, Nguyen and Nguyen (2013)indicated five key factors related to the incidence of school dropout: test performance,
the household’s financial condition, parents’ level of education, the distance from thechildren’s home to school and ethnic minority status of the child and their household
members. In the other research, Le and Tran (2013) considered three reasons to thequestion why a child dropped out of school, which are the lack of interest in school, thechild work and the high direct cost of education. Finance seems to be an importantfactor on the school dropout problem. However, there is still little information or
research on the link between dropping out of school and financial issues. Financial
issues can be understood to include macro and micro financing. Macro financing refers
to government expenditure and budget allocation and includes some financial support
programs such as tuition exemption, the food aid program, and the school construction

1

program, while micro financing, in this case, refers to individual expenditure on
education and the financial situation of the children’s household.
This study sets a hypothesis that the poverty and the financial situation of thehouseholds are important factors to the problem of school drop-out. Utilizing the dataset
of Young Lives research program collected through three rounds of survey, this study
focuses on analyzing the significance of financial issues on the decision whether to keepon going to school or not, and the effect of government’s support policies on thatdecision of the children. Finally, policy recommendations on how to ensure effective
financial support policies of Vietnamese government and other non-governmentorganizations will also be presented in the last section of the report.

2. Vietnam’s education situation.
The national education system of Vietnam is based on Article 4 of the Law on
Education established in 2005 and amended in 2009. The education system includes
early childhood education (kindergarten and pre-school), basic education including
primary education (Grade 1 to Grade 5) and lower secondary education (Grade 6 toGrade 9), upper secondary education (Grade 10 to Grade 12), vocational training, andhigher education (college, university: bachelor, master, doctor). 9 years of primary andlower secondary education is compulsory and school is free for the first 5 years ofprimary education. In recent year, Vietnamese government has made a lot of efforts in
education development that made the significant rise in the number of students in eacheducation level. Some highlights on the situation of education in Vietnam from earlychildhood education level to upper secondary education level are summarized as below.

2.1. Early childhood care and education
Due to the awareness of the importance of early childhood care and education(ECCE) to the children, Vietnamese government has made a huge effort expanding
school provision and encouraging children to go to preschools. Then, the average grossenrolment rate for pre-primary education has been increased, ranging around 30 ~ 40%,from 31.58% in 2000 – 2001 school year to 41.39% in 2012 – 2013 (Ministry of2

Education and Training 2014). However, in fact, the system of public preschools,
especially in urban areas, is so overloaded for both permanent residents and migranthouseholds, while school fee in private preschools is so high that the households cannot
afford their children the chance to attend pre-primary schools. Therefore, instead ofgoing to preschools, as the local customs, the children will be raised by their
grandparents until they start Grade 1 (VinaCapital Foundation 2014). The ECCE aims
to give the children the emotional and physical preparedness for primary school, andhence, it still needs the continuous involvement of the government and the changes inparents’ awareness of the importance of preschool education as well as the customs in
educating their children.

2.2. Basic education (Primary education and lower secondary education)
The government’s efforts to improve the education access and to ensure the school
enrolment at the right age of children entering Grade 1(with primary school) and Grade
6 (with lower secondary school) have been seen in recent years. Based on the data of
Ministry of Education and Training (2014), the net enrolment rate (NER) of primaryeducation increased by 2.35%, from 95.95% in school year 2006 – 2007 to 98.31% in2012 – 2013. Moreover, the enrolment rate of children aged 11-14 into lower-secondary
education has also increased from 81.04% in school year 2006 – 2007 to 88.04% in2012 – 2013.
Thanks to effective government policies for ethnic minorities and socio-economic
development policies for mountainous areas, many ethnic minority students can go toschool these years. The enrolment rate of ethnic minority children in primary educationand lower secondary education in school year 2012 – 2013 was 17.56% and 15.90%
respectively. Some preferential policies such as the policies of developing ethnic
minority semi-boarding and boarding school network, supplying textbooks, schoolsupplies and computers for ethnic minority students have contributed on narrowing the
gap between ethnic minority group and more advantaged group in the recent years.

32.3. Upper secondary education
After 9 years of compulsory education, students are required to take high school
entrance exam for 3 years of upper secondary education. However, the current publichigh school system can only accommodate about 70 to 80 percent of the students
graduating from lower secondary schools. Those who failed in the exam have to go to
private schools, which are generally more expensive and beyond the affordability ofmany poor students (World Bank 2014). For that reason, many of them have no choiceother than dropping out of high schools or going to vocation schools. Besides the public
vocation schools, a large number of private vocation and training schools have been
established in the cities, industrial areas, even in the employment service centers ofyouth association unions in the districts. It is likely that non-public vocation schools
with flexible enrolment period, various learning programs and different length ofcourses could meet the diverse needs of students on vocational training and financial
affordability.

3. Relationship between school dropout and financial issues
3.1. Expense for education
Besides the good results in raising the enrollment rate in each education level,
keeping the children studying continuously in schools still remains a serious issue,
particularly in lower secondary and upper secondary education. This is due to the reason
that after 5 years of free primary education, students must pay for tuition fees. However,despite the fact that school is free for 5 years of primary education, the households haveto pay for more items apart from the school fees in order to send their children to school.
Indirect costs including expense for school construction, uniforms, textbooks, extra
classes, meals and transportation which are set differently between schools and areas
can be considered as insurmountable barriers for many poor families. Table 1 indicatesmonthly income and average monthly expense on education per person by five income
quintiles in 2012.These data were collected by the Vietnam Household Living Standard
Survey (VHLSS), which has been implemented every two years by the General
Statistics Office of Vietnam (GSO).

4

Table 1: Monthly income and Average monthly expense on education per person
by income quintiles (2012)
Unit: 1000VND

Quintile

Monthly
incomeperpersonAverage
expense foreducation/
1 person/
1monthRate ofexpense on
education on
monthly
income (%)

Quintile 1(Poorest)

512

119

Quintile 2(Loweraverage)984

Quintile 3(Average)1500

By expenditure item
Schoolfees

Schoolfund

Uniform

Textbook

Extra
class

Others

23.3

28

13

9

11

10

29

217

22.1

53

19

14

17

24

62

316

21.1

89

24

17

22

42

84

Quintile 4
2223
397
17.9
122
28
19
24
45
107
(Medium)
Quintile 5
4785
706
14.8
231
44
22
32
74
163
(Richest)
Adapted from “Result of the Vietnam household living standards survey 2012”, by General Statistics
Office of Vietnam, 2012, p. 93, pp. 207 - 209.

As it is described in Table 1, the expense on education of the household of richest
quintile is 706.000 VND for one month, which is nearly 6 times more than the poorest
quintile (119.000 VND). However, based on the column showing the rate of expense on
education in monthly income, it can be seen that the rate of the poorest quintile is thehighest in comparison with other quintiles due to their low monthly income.
Moreover, as revealed by the data in Table 1, school fees and extra classes could be
supposed to be the main expense items that make expenditures on education becomeburdens on the households and the children. The basic education that children usuallyattend is on a half-day at school basis. Therefore, after formal classes, they take the extra
classes organized by their teachers for further private tutoring. The extra class forprimary students and full-day schooling students has been banned by the Ministry of
Education and Training since 2012, but it has been still popular at the secondary level
because the students want to have better academic performance and more practice inorder to pass the entrance exams into high school and university (VinaCapital5

Foundation 2014). It becomes unfair to the poor children when they cannot afford to go
to extra classes, which may lead to the poor performance at school. At the same time,poor performance at school has been identified as a strong predictor of school drop-out.
In the research of Le and Tran (2013) on the children of Young Lives survey, thechildren who had poor or very bad test performance have a probability over 40% higherof dropping out of school before completing lower secondary education than those who
performed well or excellently. Not to mention whether extra classes have an influenceon the test scores or not, expense for extra classes along with other indirect expenditures
have become financial burdens to poor children in order to go to school.
Aside from those expenses, both direct and indirect costs for education increase when
the children go to higher grades, which are illustrated by Table 2 hereafter.
Table 2: Average expense on education per person in one month by level of schools
Unit: 1000VND
Level of schools
Year

Kindergarten/pPrimary

reschool

Lower

Upper

Vocational

College,secondarysecondaryeducation

university and
upper

2004

47

26

46

88

139

308

2006

63

40

60

117

254

359

2008

93

65

89

162

372

499

2010

119

94

127

240

498

845

2012

183

123

197

322

633

1111

Adapted from “Result of the Vietnam household living standards survey 2012”, by General Statistics
Office of Vietnam, 2012, p. 93.

The expense for primary school is found to be the lowest in the comparison withother levels of school due to the free tuition fee, and the education costs are increasingin every level of education. Turning to the type of schools, for children who enrolled in
non-public or semi-public schools, fees can be several times higher than for thoseattending public schools. Table 3 below shows the monthly average expense on
education per person sorting by type of school. It can be seen that there is a significant
difference in expense on education between public and non – public schools.

6Table 3: Average expense on education per person in one month by type of schools
Unit: 1000VND
Type of schools
Year

PublicSemi-public

People-founded

PrivateOthers

2006

94

127

230

214

279

2008

140

163

447

344

321

2010

204

-

716

1,027

612

2012

285

-

1,454

865

1,186

Adapted from “Result of the Vietnam household living standards survey 2012”, by General Statistics
Office of Vietnam, 2012, p. 100.

In Vietnam, there are some different types of school that are regulated by thegovernment which are public school, semi-public school, people-founded school andprivate school. Public schools are schools which are established and invested by theState including the construction of facilities and the budget for recurrent expenditure
while semi – public schools are schools, of which the budget for construction and otherexpenditure are shared by not only the State but the private as well. People-foundedschools are schools which are founded and invested for the construction andoperational expenditure by the communities; and private schools are school which areestablished and operated by individual or social organizations (non-governmentorganizations) and non-government’s fund. In fact, People-funded schools and private
schools are more prevalent at the upper level, while the primary schools are almost
public. The expense of non – public schools is higher than public schools, so the resultsof Table 2 that the average expense for education of students in primary level is lower
than higher level of education are understandable.
In summary, the costs of sending children to schools are heavy burdens for manypoor parents. The lower the household income is, the greater the effect that direct andindirect costs of education will have on household’s ability to ensure the education of
their children.

73.2. Analysis of the link between school dropout and financial issues
3.2.1. Description of the hypothesis, variables and the modelHenceforth, this paper examines the hypothesis that financial condition of thehousehold has enormous impacts on the school dropout decision of the children, using
the data of Older Cohort from round 2 and round 3 of Young Lives survey program.
Young Lives is a long-term international research study investigating the changing inpoverty situation of children. This research study has been taken to 12,000 children infour developing countries – Ethiopia, Peru, India and Vietnam for over 15 years.
Through interviews, group work and case studies with the children, their parents,
teachers, community representatives, information about children’s social circumstances,
their perspectives on their lives (including health, education, feeling, social capital…)
have been collected. The research is following two groups of children in each country
including 2000 children who were aged between 6 and 18 months when the first survey
round was carried out in 2002 (called Younger Cohort) and 1000 children aged between
7.5 and 8.5 years (called Older Cohort). The first round (round 1) of survey took placein 2002, the second round (round 2) in 2006 – 2007, and the third round (round 3) in2009 – 2010. For the Older Cohort, in general, they were in Grade 3 (primary school) inround 1, Grade 7 (lower secondary school) in round 2 and Grade 10 (upper secondary
school) in round 3.
In Vietnam, five provinces from five regions were selected for the survey consisting of
Lao Cai (Northeast region), Hung Yen (Red River Delta), Da Nang (Central Cities),
Phu Yen (South Central Coast) and Ben Tre (Mekong River Delta). Five provinces arethought to be representative of five regions about the characteristic on nature, economic- social situation and poverty situation.
In this study, a probit model, one of the econometric analysis models has been used toanalyze how the financial condition of the household effects children's school
attendance. The model is shown as below:
yi= xi β + ei
y is a dummy dependent variable which equals 1 if the child is currently enrolled inschool, and zero otherwise. x is the vector including some personal information of the8children, the financial situation of the children’s household and several additional
expenses for education. β is the coefficient of each independent variable x, e is theerror terms and i represents the observation values. Independent variables x consist of
the variables below.
1. Children’s gender (1 = Female, 0 = Male)
2. Age of children
3. Living areas (1 = Rural, 0 = Urban)
4. Father’s education level
5. Mother’s education level
6. Household size
7. Poor condition (1 = Included in the list of poor household made by Commune
Committee, 0 = otherwise)
8. Wealth index
9. Having loans (1 = The household has loans in the last 12 months, 0 = otherwise)
10. Attendance in extra class (1 = Yes, 0 = No).
3.2.2. Results of regression
Table 4 shows the results of probit regression for the data of Older Cohort from round2 and round 3 of Young Lives survey program. Regarding the children’s gender, inround 2, girls are 1.22% less likely to attend school than boys. However, turning toround 3, the probability of girls going to school is 3.58% greater than boys. This result is
consistent with the statement about gender disparity problem which has been mentioned
in the report “All children in school by 2015. Global initiative on out-of-school children:
Vietnam country study” (2013).
“Gender disparity is small or non-existent in primary school age, except in Mongethnic group and in the group of children with disabilities. It starts to show once
children reach secondary school age, especially among ethnic minority groups whereboy out-of-school and boy drop-out ratesare higher than those of girls, except in Mongethnic group, children with disabilities and migrant children. This may indicate thequality issue which involves for example the relevance of education in terms of skills
development and gender responsiveness from an employment perspective”.

9Regarding the significant results of “age of children” variable in both rounds, alongwith the increase in the child’s age, the probability of dropping out of school becomes
greater. The data in the above mentioned report has also indicated that at the age of 14,
almost 16% of the age group population has dropped out of lower secondary school
while the figure raised to more than 39% at the end year of upper secondary school,
when the children are 17 years old.
Children living in rural area are 4.52% more likely to drop out of school than children
in urban area in round 3. This result is flagrant due to the lower income of households inrural area than households in urban area, the lack of schools and the popularity of childwork in the rural.
Education level of the parents also has effect on the decision of children on going toschool in round 2. The effect of the father’s education level is not significant whereasthat of the mother slightly increased. The children whose mothers have high educationlevel are more likely to keep on going to school by 0.52%.
The negative sign in the coefficient of the household size indicates that the children
from big household are 1.02% (in round 2) and 1.12% (in round 3) less likely to keep on
going to school than from the smaller family. It means the more siblings the children
have, the more difficulties their parents face to afford their continuing education.
The statistical significance of the poor condition in the estimation for round 3 isconsistent with the expectation that the poorer the household is, the less probability thechildren continue going to school. The household in list of poor households created by
Commune Committee is the one that meets the criteria for Hunger Eradication &Poverty Reduction Program stipulated by the Ministry of Labor, Invalids and Social
Affairs (MOLISA). The criteria consist of population size, remoteness, poverty rate,
existing basic infrastructure, education and health indicators (enrolment rate, child andmaternal mortality rates). Based on these criteria, local governments conductedassessments and selected the most impoverished and disadvantaged ethnic minorities
and mountainous communes to become the targeted beneficiaries of the Government’s
Hunger Eradication & Poverty Reduction Programs (Ha Viet Quan 2009).

10

Table 4: Probit model: Factors effect on the probability ofChildren’s school attendance
The probability of children's school attendanceRound 2Round 3
Children’s gender (female)-0.01220.0358*(0.0168)(0.0216)
Age of children-0.00778***-0.0112***(0.00228)(0.00411)
Living areas (Rural)-0.0452(0.0527)
Father's education level-0.000407(0.000429)
Mother 's education level0.00524*(0.00273)
Household size
-0.0102*-0.0112(0.00567)(0.0106)
Poor condition-0.130***(0.0460)
Wealth index
0.137**
0.334***(0.0587)(0.0991)
Having loans-0.0109-0.0721***(0.0167)(0.0244)
Attendance in extra class
0.332***(0.0403)
Observations474
931
LR chi2
31.23
260.04
Prob> chi2
0.00010.0000Pseudo R2
0.13640.2730Note: dF/dx is for discrete change of dummy variable from 0 to 1z and P>|z| correspond to the test of the underlying coefficient being 0(*) Robust standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

With significant estimation results of wealth index variable in both round 2 and 3, it ishighly likely that the prosperity is an important factor in the probability of children’s
school attendance. The probability of keeping them in school increases by 13.7% inround 2 and 33.4% in round 3 for one unit of increase in wealth index.
Having loans, including both formal loans from banks and informal loans from otherindividuals has become financial burdens for poor households. Due to this financial

11

reason, children from these household have 1.09% of school dropout probability inround 2, and 7.21% of the probability in round 3.
Finally, regarding the expense for the education, from data of survey round 3,
children who attend extra class have 33.2% of higher probability to continue schoolingthan other children. In round 3, 64% of 960 children participated in extra classes. For
the reason of not attending extra class,15% of the children answered that the extra
classes are very costly, while the two biggest reasons were that children were notinterested in schooling (21%) and they think extra classes are not necessary for theirknowledge (16%). These results coincide with the findings of Section 3.1 that extra
classes are popular in school attending children or wealthier children, and high expensefor extra class is one of the main reasons that made the children leave school early.
To summarize, the financial condition (poverty and prosperity) of the household
could be considered as a key determinant that affects the decision of children onwhether to keep studying in school or not. The affordability of education costs has
become an economic barrier to children’s school attendance. Once the families cannot
afford to pay for education costs, their children will be at risk for dropping out of school.
Therefore, if the education program is not interesting enough to attract the children, andif the parents as well as the children do not still understand the benefit of education, it iseasy to understand the reason why they drop out of school.

4. Solutions to the school dropout problem
4.1. Financial support policies of government
In order to address the financial barriers of households, the government has adopted
policies to eliminate school fees and other costs, or introduced cash transfer programs,
food aid programs, school construction programs together with other internationalorganizations. Some main support policies on education for poor children and minority
children stipulated by Vietnamese government are summarized in Table 5 below.

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Table 5: Some support policies on education of poor children
Type of

Name of programs

supportInfrastructure
construction

Beneficiaries

135-II Program/

Communes ofInfrastructure component

Program 135

Resolution 30a
Circular No.109/TTLB-BTC- 62 poor districts
BGD-DT
Poor students
Decision No.20/2007/QD-TTg/ (of National Target
Program)Circular No. 43/2007/TTLTBTC-BGĐT

Poor students

Content
Build or upgrading classrooms
Build or upgrading classrooms,
boarding classes- Tuition exemption, reduction- Loan for food:
800,000VND/household/month
Scholarship equal to 80% of basic
salary- Support for food, textbooks,
notebooks:

Decision No. 112/2007/QDTTg
Tuitionexemption,

Circular No.06/2007/TTUBDT/Minority children inkindergartens andboarding schools

140,000VND/month in 9 months
for boarding students
70,000/month for kindergarten
students- Support for poor households:

textbook

1 million VND/1 time/household

supply, foodaid program
Decree No. 49/2010/ND-CP

Poor students, Ethnic - Tuition exemption
minority students
Students at schools in

Decision No.36/2013/QD-TTg

extremely difficult
socio-economic
regions- Subsidy for educational costs
Rice subsidy:
15kg of rice/ month for 9
months/student

Children in
Circular No. 09/2013/TTLTBGDĐT-BTC-BNV

kindergartens, pre-Support for lunch meals

primary schools in

120,000VND/month in 9

difficult socio-

months/children

economic regions
Adapted from “All children in school by 2015.Global initiative on out-of-school children: Vietnam
country study”, by Ministry of Education and Training, 2013, pp. 100 -102, pp. 121 - 122.

13

Moreover, there are many international organizations such as UNESCO, UNICEF,
UNDP, WB, ADB, Save the Children and other international agencies of countries such
as Japan, Australia, Canada, France, Germany, the UK supporting for the improvementand development of education and training of Vietnam. Table 6 shows some
information about the general aid to education in Vietnam in 2011 – 2012.
Table 6: General aid to education in Vietnam
Year
2011
2012

Direct aid to
Direct aid to
education
basic education(million(million USD)
USD)
270
36
235

36

Direct aid tosecondaryeducation(million USD)
50
54

Share of direct Share of basic
aid toeducation in
education in
total aid tototal ODA (%) education (%)
7
29
5

26

Adapted from “EFA Global Monitoring Report: Education for All, Achievements and Challenges”, by
UNESCO, 2015, pp. 402-403.

The international assistance projects using ODA budget usually set the priorities on
the construction of school facilities, training of local teachers, training foreign language
and information technology at the upper secondary schools and vocational training.
Meanwhile, directly financial assistance projects or food aid programs to targeted
beneficiaries are usually implemented by international and local non-profit
organizations and non-government organizations (hereinafter referred to as “nongovernment organizations”). Although there are few general reports or statistic data on
the implementation of the projects funded by non-government organizations, it isundeniable that thanks to these support programs of government and non-governmentorganizations, poor children in communes with difficult socio-economic conditions
have had more opportunities to access education and maintain schooling.
However, besides the positive impacts, the Ministry of Education and Training(2013) has also pointed out some constraints of these policies, which are summarized as
three main problems as below.
Firstly, the support amounts are much lower than the expenses that children have to
pay for to go to school. Subsidy for meals is so low that the adequate nutrition forchildren cannot be ensured. Moreover, the schools have no kitchens to prepare for the14

lunch, that makes the children go home for lunch and refuse to come back schools in theafternoon.
Secondly, the existence of many different policies causes the overlapping andconfusion not only to the implementing organizations but also to the beneficiaries. One
child and one household could receive the supports from more than one policy. Several
ministries and agencies take the responsibilities of implementing and monitoring thesame policy, which leads to the ineffective coordination between those agencies as wellas the delay in planning the implementation, preparing budget and the delay in the
disbursement of subsidies.
Finally, the lack of sharing information about the policies has caused the incomplete
understanding about the purposes, objectives, rules, targeted beneficiaries andprocedures of the policies. This has resulted in two problems: one is the misuse of
subsidies and the other is the doubt of being unfairly treated among people.
Furthermore, there was one more important problem reported by UNICEF andMinistry of Planning and Investment (2013) that the amount of cash transfer has been
leaked during the process of transfer. The amount that children and households received
has been reported to be 9% to 31% lower than the official allocation. The households
said that they have paid informal commission to local officials and school officials inorder to receive their subsidies. Table 7 hereafter illustrated the percentage oftransferred amounts in one time of disbursement.
Table 7: Percentage of transferred amounts in one time of disbursement
Process of transfer

Percentage of transfer amounts

From Central Government to Provincial Government

100%

From Provincial Government to District Government

100%

From District Government to Schools

92% ~ 100%

From Schools to Households

69% ~ 91%

Adapted from “Policy brief: Increasing efficiency and effectiveness of cash transfer schemes for
improving school attendance”, by UNICEF and Ministry of Planning and Investment, 2013, pg.5.

The above shortcomings of current support policies should be taken into
consideration so that those policies can help reduce the number of children who dropout of school due to financial pressure.

15

4.2. Analysis for the effectiveness of the financial support policies
To see how the support policies of government and non-government organizations
impact on the school attendance of children, another probit regression was run with thedataset of children from Older Cohort in two surveys (round 2 and round 3) of Young
Lives program. The model is shown as below:
yi= xi α +εiy is still a dummy dependent variable which equals 1 if the child is currently enrolled
in school, and zero otherwise. α is the coefficient of each independent variable x, ε isthe error terms and i represents the observation values. In this model, x consists of 8
independent variables, which are explained hereafter.
1. Household size
2. Living areas (1 = Rural, 0 = Urban)
3. Poor condition (1 = Included in the list of poor household made by Commune
Committee, 0 = otherwise)
4. Beneficiaries of support/cash transfer for schooling (1 = If the household
received support in cash or in kind from government or educational organizations
including tuition exemption for their children’s schooling, 0 = if otherwise).
5. Beneficiaries of transfers from food aid programs (1 = If the household received
transfers from food aid programs, 0 = otherwise)
6. Beneficiaries of transfers from charity groups/ NGOs (1 = If the household
received transfers from charity groups or NGOs, 0 = otherwise)
7. Beneficiaries of transfers from other government benefits (1 = If the household
received transfers from other type of government benefit, 0 = otherwise)
8. Beneficiaries of transfers from social security/ social subsidy (1 = If thehousehold received transfers from social security/ social subsidy, 0 = otherwise)16

Table 8: Probit model: Impact of support programs to the probability ofChildren’s school attendanceHousehold size
Living areas (Rural)
Poor condition
Beneficiaries of support/cash transfer for schooling
Beneficiaries of transfers from food aid programs
Beneficiaries of transfers from charity groups or NGOs
Beneficiaries of transfers from other government benefits
Beneficiaries of transfers from social security/social subsidy

The probability of children's
school attendanceRound 2Round 3-0.0139***-0.0335***(0.00327)(0.00970)-0.171***(0.0264)-0.232***(0.0501)
0.0262***
0.0973***(0.00880)(0.0303)-0.0396-0.159***(0.0310)(0.0540)0.0255**0.116**(0.0120)(0.0548)-0.0119-0.0369(0.0283)(0.0372)
0.0357(0.0449)
791
960
21.95
94.37
0.00050.00000.08620.0909Observations
LR chi2
Prob> chi2
Pseudo R2
Note: dF/dx is for discrete change of dummy variable from 0 to 1z and P>|z| correspond to the test of the underlying coefficient being 0(*) Robust standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

Table 8 represents the results of this probit regression. The household size has shown
the statistical significance in both rounds. Children with more siblings are less likely tokeep in school than the children from the smaller family by 1.39% (in round 2) and3.35% (in round 3).
In round 3, children living in rural area are estimated to drop out of school by 17.1%
more than children in urban area. Moreover, the children from household in the list ofpoor household have the probability over 23% higher of dropping out of school thanother children. From the results of three above independent variables, poverty remains

17

an important reason that caused the school dropout of children. Therefore, it is expectedthat financial support programs would help keep children in school.
First of all, children from the household that received the support in cash or in kindfrom government or educational organizations for their schooling is more likely tocontinue studying by 2.6% in round 2 and 9.73% in round 3. This type of support also
includes tuition exemption and tuition reduction policies. Additionally, children who
were transferred from charity groups or non-government organizations were also more
likely to go to school in both rounds, by 2.55% and 11.6% respectively.
On the other hand, with respect to the support from the food aid programs, the effectof the program was statistically significant in round 3, but by the negative tendency inboth rounds. It means children who received transfers from food aid programs weremore likely to leave school early than the other children, with the estimation of 3.96% inround 2 and 15.9% in round 3. This result conflicts with the expectation that support
programs would affect positive changes in children’s school attendance. The negative
tendency could be explained by the prediction that, although the household in very poor
condition received support from the food aid programs, it is still highly unlikely that theparents have enough money to keep their children in school due to the high cost of
education that was described in Section 3.1. In this case, giving food or meals to thehousehold or the children could improve the nutritional status of children, but in somecircumstances, the support program seems to be ineffective in solving the school
dropout problem with some specific beneficiaries.
The estimation of the school dropout probability of children who received support
from other government benefits was in the same tendency with that of children
supported by food aid programs. Those children have 1.19% in round 2 and 3.69% inround 3 of probability to drop out of school. In contrast, children who were thebeneficiaries of transfers from social security and social subsidy were less likely to leaveschool early than the other children.
Based on the analysis results in Table 8, it has been found that many points at issue
still remain in the implementation of these support policies besides some constraints
summarized in section 4.1 above.

18

Firstly, there are many supporting programs towards poor children and ethnic
minority children, however those programs are still incoherent and incomprehensive.
Children are exempt from paying tuition fees but pay for other indirect costs, which
probably acts as financial burdens for poor families. Children received the financial
support but the distance from their home to the school, the difficulty in accessing theschool, or the content of curriculum have become barriers that make children leaveschool early. In addition, many policies focus on improving access to education such asbuilding new schools and boarding classes than improving the quality of education andquality of teachers. New schools were built but there were still lack of facilities,
textbooks and stationeries for children, and especially lack of trained teachers in theschools.
Secondly, the misuse of subsidies is also an issue that needs the concern. Due to thedelay in disbursement, some children who already graduated from lower secondary
school still received cash transfer, while some dropped out of school before receiving
the transfer. This caused the situation that the money was not used for children’s
education, but for their parents to buy television, cattle or clothes (Gia Lai online
newspaper). Another example is about the food aid programs. In the recent years, morechildren who live far from schools can stay in the boarding schools after the classes,
which are thought to reduce effectively the rate of school dropout children due to thedifficulty of accessing school. However, there is one more advantage of boarding
schools. One child living in a boarding school said “I like to stay in boarding school
because I can have full belly here”. According to To To Tam from Save the Children
Vietnam (2013), in the poor household, most of the food is provided to small babies andadults who do hard work in the field. “Parents often think that children are just playing
and therefore do not need much to eat. In boarding schools, children can have threemeals per day instead of one or two per day at home”. Therefore, it can be seen that, bymany reasons, the subsidies could not go directly to the children and could not be used
for their education, which resulted in the ineffective implementation of supporting
policies.
The third problem is about the selection of targeted beneficiaries and the forms offinancial support. The financial resources are limited, but the targeted beneficiaries

19

scattered and were not categorized by the level of poor condition, which leads to thedifficulty in monitoring the implementation and achievement of the expected results.
For example, there are some households who are extremely difficult to escape thepoverty. In some circumstances, the “wrong way of support” of government could cause
the problem called “moral hazard”, which can be understood that these poor households
do not try to get out of the poverty and continue to receive the support from thegovernment. For these households, despite receiving the support in cash or in kind, or
provision of food, the probability of their children to attend school is very low. Many
people said that they want their children to leave school and work to help their families
because even if their children go to school, they have not enough money to buy books
and pay for other expenses (Tuoitre online newspaper)
However, the results of the probit regression should be interpreted with caution.
Except for the first three variables, the other variables are at risk of being endogenous.
The problem is about the relevance between the variables about the beneficiaries, forexamples, some people can be the beneficiaries of some programs that make them haveenough conditions to go to school. In this case, the analysis results cannot show exactly
the efficiencies of each support program to the decision of school continuation of
students. Dealing with the problem of endogeneity is reasonably considered as beyond
the objectives of this paper, and it needs a further study.
To summary, it can be seen clearly that further consideration should be taken into
account in order to increase the effectiveness of financial support policies and othertypes of supporting programs in the solution to the school dropout problem in Vietnam.

4.3. Policy recommendations
4.3.1. Recommendation –Lessons from Mexico’s experience
In order to solve the school dropout problem among Vietnamese children, policy
recommendation should be given towards children, their families, schools, teachers andthe management agencies. Furthermore, recommendation for the policies and thecurrent education system may be necessary for the more effective education
development. However, the recommendations in this study focus on the solutions to20some of the constraints mentioned above, for the purpose of improving the efficiency
and effectiveness of financial support programs to poor families and poor children.
To extend the coverage of targeted beneficiaries and expenditure for schooling ofchildren, as well as to ensure the subsidies to be used directly for the children’s
education, this study recommends the “conditional cash transfer program”. Actually,
most current cash transfer programs of Vietnam have their objectives to mitigate thefinancial burdens of poor families to ensure school attendance of their children. For
example, one of the meaningful policies in these years is the Decision No.112/QD-TTg
dated on 20/07/2007 by the Prime Minister to support school attendance of poor andminority children in kindergarten school and children in boarding schools in othereducation levels. However, in the report about the implementation of this policy, it was
mentioned that although the policy had very clear objectives, when it comes into
implementation, it is likely that there was no link between cash transfer and school
attendance. The cash transfer was unconditional to school attendance, which wasdifferent from the official guidelines (Ministry of Planning and Investment 2013). Thus,a program with specific objectives and monitoring system should be designed clearlyand carefully in the framework of these support policies.
In Mexico, a conditional cash transfer program called PROGRESA has been very
successful in reducing childhood poverty along with improving children’s nutritional
status and school attendance. The idea of this program was that poor families who
cannot pay for their children’s education had to have their children drop out of schooland send them to work to have money for buying food and other consumption of thefamily. Therefore, the program provided families with the money as “opportunity costs”
to send the children to school instead of having them go to work. The children
participating in this program were under 22 years old, and enrolled in school between
the third grade of primary school and the third grade of high school. The program began
in 1997 in poor rural areas and then expanded to urban areas. In 2002, the name waschanged to Oportunidades. The number of beneficiaries of this program was over 4
million families and covered nearly all the poor families in the population.
According to Huyn (2008), there are several key characteristics of Mexico’s
conditional cash transfer. Firstly, the targets of the program were poor or extremely poor

21

families who had gender bias, and the cash was usually transferred directly to themothers. Second, this program also included a nutrition and health component thatprovided cash transfers and opportunities of visiting health clinics in local areas tochildren, pregnant and lactating women. Third, the transfers for girls were higher thanfor boys due to the purpose of encouragement of school attendance for girls who havehigher drop-out rate than boys. Finally, the grants increased when children went tohigher grades, because children in secondary school and high school were expected tohave higher opportunity costs than those in primary school. The monthly amounts ofmoney that primary school children supported was about $10.50 and increased to about$58 for boys and $66 for girls in the third year of high school.
Regarding the operation of the program, UNDP (2011) has summarized the basic one
as follows. First of all, the federal administrative group determined targeted families.
The families participating in this program must register family members with the school
and the health clinic where they were assigned. Local health and school officials
recorded the household’s attendance in school and clinics and sent this information to
the administrative group every two months. The payment were calculated by theadministrative group based on gender, age and grade of children in school, along withthe frequency of school attendance of children and clinics attendance of mothers. After
that, the payment was sent to payment center where mothers could go directly to collectthe money. The procedure and the payment were implemented every two months, andthe information of school and clinic enrolment must be updated every year. In the
program, children received payments for buying school supplies and food also. After acouple years of implementation, poor children in the Progresa program have increasedin their school attendance, received healthier diets and health care. Participating children
have less working time than the others, especially in rural areas. The following tableillustrates the impact of this program on school enrollment and school attendance ofpoor children in rural and urban areas, which was reported by LaVonda (2011).

22

Table 9: Impact of Progresa program on Mexico’s education
School level

Impacts

PrimaryzIncrease in primary education completion rate and decrease in drop-out rateschoolafter primary school

Secondaryz12% increase in secondary school enrollment (1977 – 2000)

schoolz23% increase in secondary school completion (2010)

Included:
42% increase in school enrollment of 12 years old children (2004)
35% increase in school enrollment of 14 years old children (2004)
28.7% increase in girls enrollment to secondary school (1997 – 2007)
High school

z23% increase in high school enrollment (2002)
zDecrease in drop-out rates of high school students

Included:
23% decrease in drop-out rates of 16 – 19 years old children
OverallzIncrease in school attendance and school activities of all targeted children
zDecrease in child work (1998 – 2000)
z10% points higher of mathematics test performance (1998 – 2003)
zIncrease in average length of time in school by 0.85 year for girls and 0.65 year

for boys (1997 – 2007)
Adapted from “PROGRESA/Oportunidades Mexico’s conditional cash transfer program: Promises,
Predictions and Realities”, by LaVonda Harrington, 2011, pg.55.

For the effectiveness in reducing poverty, increasing school enrolment and school
attendance, health and nutritional conditions of family members, especially of children,
as well as the cost effectiveness, it has been said that “Progresa/ Oportunidades hasbrought to the CCT approach to poverty alleviation, it has proven important not only for
Mexicans but for poor people around the world" (Beryl 2010).

4.3.2. Policy implications for Vietnam
Based on the importance and the problem of lacking the linkage between cashtransfer and school attendance of the Decision No.112 mentioned above, this study
recommends that it would be advisable for the Vietnamese policy planners to expand or23

to improve some contents so that current cash transfer policies including Decision
No.112 could become trial “conditional cash transfer programs” in Vietnam.
Principles:
It is highly likely that conditioning plays an important role in cash transfer program.
Cash transfer itself could not create the children’s incentive of going to school. In the
U.S., the New York conditional cash transfer program has changed the conditions forthe cash transfers in order to create the incentive for children to obtain better
achievement, in addition to increase school’s participation. Children attending school
more than 95% of the time received 25$ - 50$ per month. Those who passed thestandard tests was given 300$ - 600$, and those earning enough credits to graduate fromhigh school on time received 600$ (Brett and Luciana, 2010). Therefore, the frameworkin which the beneficiaries of cash program could receive payments in return for taking
some basic services including school participation and health care to improve theireducational level and health condition seems to be an effective way of investing inhuman capital of the poor.
Selection of beneficiaries:
The selection of targeted families and children should be implemented clearly andshould cover all the poor who really need the assistance. In Vietnam, most of thefinancial support programs aim to poor children or ethnic minority children living in therural, mountainous areas with very poor economic – social condition. However, there
are still some differences in the targeted children of each program that make theconfusion in the administrators and the families. For example, in one family in Yen Bai
province, the younger child was a beneficiary of one support program, but her brotherwas not supported (Yen Bai online newspaper). In order to avoid this kind of confusion,
the program planners should use a clear and detailed targeting mechanism to select thebeneficiaries. The Progresa program selected the participants through a three step
process including identifying targeted villages in the first stage, identifying targetedhouseholds in the second stage, and then announcing the eligible families into public in
the final stage. The purpose of the final step is to get the community and families’
reaction and to give a chance for excluded families to apply for reconsideration. This24

stage has not been implemented in Vietnam, but it has huge meaning in targeting truly
poor people of the community. Moreover, thanks to this careful selection process, a full
dataset of the household and the children could be collected for the results evaluation in
the upcoming time.
Regular report and timely cash payments:
The procedures for selecting, approving eligible families and children, planningbudget as well as submitting the report on children’s school attendance should be
stipulated and the administrators have to exactly comply with the deadline. Because thecomplex procedure leads to the delay in disbursements, and as a result, the untimely
disbursements have weakened the meaning of “the condition” and the effectiveness ofthe support policies. For instances, in Decision No. 112, the cash is promised to betransferred to the children in 9 months of a school year. But, many children received the
grants after the first half of the school year, which caused difficulties for them to buy
school supplies and pay for other expenses. Therefore, it should be required for theschool officials to report to local officials about children’s school attendance every
month or every two months. The local officials, after confirming the report, should givethe payment immediately and timely for the children. The simplification of the report
and the payment procedures should be considered in order to not only manage theimpact of the program, but also ensure the timely assistance to poor families and poor
children.
Monitoring system:
Information, monitoring and evaluation are key factors in the implementation of the
program. In Vietnam, data collection at the school and local level about children’s
school attendance and household’s financial condition is still weak, which makes it
difficult to set a target mechanism and evaluate the impact of the policy. Turning to
Progresa program, the full dataset of all the families before and after the intervention has
provided the government, academic institutions and researchers variety of information
to analyze and identify the causal linkages and the estimation about quantitative andqualitative impacts of the program. The researches of different stakeholders havecontributed on the improvement of the program over the years. Therefore, a monitoring25

system including information collecting and tracking mechanism as well as evaluation
mechanism is recommended to be established and integrated in the policy design
Transparency in budget administration and policy’s information:
Transparency is another important factor of cash transfer program. First of all,information about the policies, targeted beneficiaries, amounts of grants and especiallyabout the condition should be announced to the public, especially to the ethnic minority
families. The announcement could be implemented by local or school officials. Many
parents from minority community said that they had no information about the support
programs. Due to lack of information about their benefit and their duty, they had no idea
about what the cash transfer would be used for or what they have to do for their children,which resulted in the misuse and ineffectiveness of the cash transfer along with thefrustration and the distrust among the community.
Secondly, the good governance and the transparency on budget management arereally important. It is suggested that a transparent and simplified budget management
system should be established within center and provincial authorities which is expected
to ensure the accuracy and effectiveness of the budget allocation. Furthermore, for theconvenience of the users including government, policy planners and the administrators,
this budget management system should be combined with the reporting, monitoring andevaluating system. In the other words, a development of a database system for the
management of cash transfer program which integrates regularly updated information of
beneficiaries before and after the support, time and amount of the cash transfers,
situation of children’s school attendance, as well as the information of the process
implemented by local and schools would become useful for the monitoring andevaluation of the policy’s impacts.

5. Conclusion
The efforts of the Vietnamese government in education development in recent years
have made the significant changes in education. However, the number of children
dropping out of school is still increasing every year. The analysis in this study has
proven that poverty is not the most, but is really an important factor that makes children

26drop out of school. Not only the low income of the household, but the high education
cost have been financial barriers to the families to afford their children’s education.
The government has addressed the financial difficulties of poor and ethnic minority
households by variety of support policies. By the quantitative analysis using data ofYoung Lives Vietnam, it was found that while direct support for schooling including
tuition exemption and support of charities and non-government organizations have had
positive impacts on children’s school attendance, the food provision had not significant
impact. The delay disbursements, the misusing of subsidies, the lack of comprehensive
policies and some other constraints have been thought to be the reasons of thisineffectiveness of those financial support policies.
Therefore, the cash transfer program conditioned on the behavior of beneficiaries isrecommended as a solution to ensure the effectiveness and to increase the impact of
support policies. Learning from Mexico’s experience –Progresa Condition cash transfer
program, Vietnamese government should strengthen the linkage between cash transfer
and school attendance by setting the condition towards the beneficiaries, planning thetargeting groups carefully and strengthening the reporting, monitoring and evaluating
system.
Finally, only the implementation of the condition cash transfer policy is not enoughfor the solution of school dropouts. It is needed to coordinate with other social policies
to ensure its success including the improvement of school quality and the access toschool as well as the capacity development of local and school officials in implementing
and monitoring the policies in local areas.

27

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