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The impact of the public expenditure cuts policy on the labor market in Vietnam
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The impact of the public expenditure cuts policy on the labor market in Vietnam
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The impact of the public expenditure cuts policy on the labor market in Vietnam. The purp ose of this study is to evaluate the imp act of public exp enditure cuts on employ ment and income to supp ort policies for the develop ment of the labor mar- ket. Imp act evaluation is of interest for policy makers as well as researchers. | Journal of Economics and Development Vol. 14, No.3, December 2012, pp. 22 -46 ISSN 1859 0020 The Impact of the Public Expenditure Cuts Policy on the Labor Market in Vietnam Nguyen Thi Lan Huong Institute of Labor Science and Social Affairs, Vietnam Pham Ngoc Toan Institute of Labor Science and Social Affairs, Vietnam Email: ngoctoan.tkt@gmail.com Abstract The purpose of this study is to evaluate the impact of public expenditure cuts on employment and income to support policies for the development of the labor market. Impact evaluation is of interest for policy makers as well as researchers. This paper presents a method – that is based on a Computable General Equilibrium model – to analyse the impact of the public expenditure cuts policy on employment and income in industries and occupations in Vietnam using macro data, the Input output table, 2006, 2008 and the 2010 Vietnam Household Living Standard Survey. Keywords: Economic modelling, public expenditure, Vietnam, labor market, impact Journal of Economics and Development 22 Vol. 14, No.3, December 2012 1. Introduction revenue of the state budget; maintaining an over-expenditure rate of less than 5 per cent of GDP; postponing ineffective public investment projects; and saving the recurrent expenditure of less than 10 per cent. Public investment is the reason for inflation because of its low inefficiency. As a result, there is an increase in production costs and product prices. This has had a negative impact on people’s income. For Vietnam’s deeper and deeper integration into the global market1, its economy is also faced with a number of constraints that are caused by the severe impact of global economic expenditure cuts. The foreign direct investment (FDI) sector , makes up 27 per cent of the total social investment. The import and export value of this sector has often stood at the rate of 55 to 70 precent of the total import and export turnover. After the global economic crisis in 2007-2008, the global
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