Are Returns to Investment Lower for the Poor? Human and Physical Capital Interactions in Rural Vietnam

Author: Walle D.v.d.

Source: Review of Development Economics, Volume 7, Number 4, November 2003 , pp. 636-653(18)

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Abstract:

If the gains from investment depend on knowledge, but households cannot hire skills, then poorly educated households will achieve lower returns than educated ones. If the income-poor are less well educated, then they will also have lower returns to investment. The paper tests this argument for the case of irrigation in Vietnam, a setting where existing irrigation can be treated as exogenous at the household level with appropriate controls for the determinants of facility placement. Strong complementarities between household education and irrigation expansion suggest that, unless disparities in education are redressed, reforms will generate an inequitable growth process in Vietnam.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/1467-9361.00214

Affiliations: 1: World Bank, Washington, USA

Publication date: 2003-11-01