The role of the private sector in education in Vietnam: evidence from the Vietnam Living Standards Survey

As part of the restructuring of the education system since doi moi or Renovation in 1989, the government of Vietnam has implemented several policy changes. These include transforming some public institutions into private ones, promoting the establishment of 'people's' and community educational institutions, and permitting the establishment of private institutions. Since the move from a centrally planned economy to a market economy is very recent, it is not surprising that private schools are relatively rare in Vietnam. This paper uses data from the 1992-93 Vietnam Living Standards Survey (VLSS) to examine the nature of private schooling in Vietnam. Estimates of the determinants of the choice among public, private and semi-public schools indicate that better off households are less likely to send their children to semi-public schools but more likely to send them to private schools. Estimates of the determinants of private (household) expenditures on education show that willingness to spend on education increases as the incomes of Vietnamese households rise. Results also suggest that the marginal cost to households of switching from public to private schools may be small; in particular, there is little additional cost associated with attending semi-public schools, and only very small (and not statistically significant) additional costs to attending a private school. No significant effects of religion or ethnicity are found, except that the Chinese have a higher level of schooling attainment and are more likely to attend private schools. Wage regressions indicate that individuals who attended private school receive higher wages than individuals with the same level of school attainment who attended public schools. The importance of parental education, especially mother's education, as a determinant of children's ultimate attainment is confirmed. One implication of this is that any targeting efforts, such as the provision of scholarshhips or vouchers, should consider using parental education to determine eligibility.