Effect of public transfer on labor supply decision of households in Vietnam

Abstract

This paper examines the effectiveness of public transfer of poverty alleviation programs on the labor supply behavior of rural households in Vietnam. The labor supply decision is analyzed by employing the individual labor supply model on the basis of data from VARHS. Analysis results show that the public transfer that the farm households receive in 2008 discourages the working efforts of households’ members in 2010. Though this effect is negative and statistically significant, its value is quite small with the marginal effect of public transfer (2008) on labor supply (2010) around 0.0004 to 0.0007 which means for each additional VND 1000 of public transfer that an household receives would lead to an decrease in number of working days of it members by 0.0004 to 0.0007day per year. And from the results of each laborer in the households, it is concluded that the transfer the households get in 2008 lead to a reduction of working time of the households by 4.219 days/year/household and 2.411 days/year/household on average.