Abstract
This paper empirically examines intergenerational economic mobility in Vietnam. The two-sample two-stage least squares estimation is employed to achieve the research objective using two primary samples of father-son pairs and father-daughter pairs from Vietnam Household Living Standards Survey of 2012, and one secondary sample from Vietnam Living Standards Survey of 1997-1998. The baseline intergenerational elasticity estimates show that Vietnam occupies the intermediate degrees of intergenerational mobility of earnings and income for both sons and daughters. In particular, a rise of 10% in fathers’ individual earnings is on average associated with an increase of 3.61% and 3.94% for sons’ individual earnings and individual income, respectively. The corresponding figures for daughters’ individual earnings and individual income are 2.84% and 3.33%, respectively. This paper also provides evidence on the average degree of inequality of opportunity in Vietnam during its transition from a central planning economy to a market-oriented system.
Highlights
Inequality has increasingly been viewed as a stylized problem facing a modern state in the twenty-first century (Piketty, 2014a, 2014b, 2015)
The R2 is 0.186, which suggests that nearly 20% of the variation in the log of individual earnings of potential fathers can be explained by these socioeconomic characteristics in the model
The baseline intergenerational elasticity (IGE) estimate of individual income is 17.25% higher than that of individual earnings. This IGE degree implicates that a 10% difference in fathers’ individual earnings is likely to result in an approximately 3.33% difference in daughters’ individual income in Vietnam. These IGE estimates for Vietnamese daughters’ individual earnings and individual income explicitly indicate the average levels of intergenerational mobility compared to other countries
Summary
Inequality has increasingly been viewed as a stylized problem facing a modern state in the twenty-first century (Piketty, 2014a, 2014b, 2015). The extent to which a child’s socio-economic status in the current generation is determined by his or her parents’ socio-economic outcome in the previous generation probably gives in-depth understanding of the degree of opportunity equality (Corak, 2013). This has been a very important motivation for extensive academic investigations of intergenerational mobility that has been witnessed over last three decades (Black and Devereux, 2011; Solon, 1999). The main difference in the approach to intergenerational mobility between sociologists and economists is how they define a measure of socio-economic status or outcome
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