In Vietnam, Any Additional Child Would Make You Poorer

When you meet somebody in Vietnam with a small child, you don't say "He/she looks beautiful!". In fact, the Vietnamese believe that if you say so, evil spirits will take the soul of your child away. Instead, you have to say: "What an ugly blob of mud!". The superstition is probably linked to the high infant mortality rates, which remain high despite the economic development of the 1990s. According to World Bank data, the share of the population living below the poverty line dropped from 58% in 1993 to 37% in 1998. Poverty reduction has continued over the last decade, albeit at a slower rate. All things considered, poverty, especially in rural ares, still makes its presence felt.

Poorer families tend to have higher birth rates. The positive correlation between poverty and fertility is recorded in other developing countries, and leads one to think there could be a causal nexus there. However, families with many children could also be adversely affected by other characteristics (low education, for instance) making them poorer. In such case, their lower economic well-being may not be ascribable to the fertility rate. In a forthcoming article on Empirical Economics, titled Estimating the causal effect of fertility on economic well-being: data requirements, identifying assumptions and estimation methods, Arnstein Aassve and I employ an array of econometric techniques to estimate the causal effect of fertility on poverty, using data from the Vietnam Living Standard Measurement Survey, conducted in 1993 and 1998. The objective is to estimate the effect of the birth of a child on a household's economic welfare in the period considered. In the article, the emphasis is on the fact that in order to estimate the causal effect, you have to make assumptions on the motivations according to which families decide to have children. A problem is that, for couples with children, you can't observe the economic well-being they would have had had they decided not to have the child. A possible way to solve this is to compare the well-being of a family which recently had a child with a family identical for other characteristics, save for the fact of not having had children. This coupling lets you isolate the effect of fertility on poverty from that of third variables correlated with both factors. By using this method, one finds a strong effect of fertility on poverty: Vietnamese households with one baby experienced a reduction in consumption of 350,000 dongs with respect to corresponding household which decided not to have a child. This figure is significant, if one considers that the average growth in household consumption between 1993 and 1998 was 1,285,000 dongs. Alternative statistical techniques yield similar results. From this analysis, it emerges that families with several children are more exposed to the risk of poverty. As a consequence, policy interventions in terms of family planning could well help alleviate poverty. For instance, a policy that provided for easier access to contraceptives could indirectly reduce poverty through improved birth control methods.