Leaving or Staying: Inter-Provincial Migration in Vietnam

Internal migration has several policy implications for economic growth and development for developing countries in general and for the fast growing low-income country of Vietnam in particular. Little research has been done, however, on inter-provincial migration in Vietnam. This study makes two major contributions to the migration and development literature in terms of the datasets and policy-relevant estimation approach. It is the first paper to use the annual survey data on migration published by Vietnam's General Statistics Office. This study also adopts a functional form to accommodate the flexibility of income's elasticity. Income, together with urban unemployment rates, are endogenously estimated with instruments that prove to be strong and valid. The inclusion of policy-relevant variables provides empirical findings that can make migration policy in Vietnam better-informed. Specifically, Vietnamese migrants are influenced primarily by moving costs, expected income differentials, disparity in the quality of Public services offered by provinces, and the demographic composition at destination and source. This paper's findings provide new insight for migration policy options, and suggest that the government adopt a holistic policy approach to maximize the benefits and minimize the costs associated with internal migration.