Policy note

Impact evaluation of increased

social support for disadvantaged
children in Vietnam
Budgetary and distributional effects in 2021

Giang Thi Cam Nguyen, Phuong Thao Nong, Nhat Huy Bui

September 2022
 Findings

 The Government of Vietnam offers social cash transfers to disadvantaged children under the
age of 16, including children without parents and children suffering from severe disabilities.
 In July 2021, the standard level of monthly social assistance for these children was increased
from VND 270,000 to 360,000 (from around USD 11 to USD 15). The budgetary and welfare
effects of this policy change have not been previously evaluated.
 Based on estimates derived from VNMOD, the tax-benefit microsimulation model for Vietnam,
the price tag of this benefit increase was around VND 8,100 billion (USD 340 million) for the
government in 2021 [revise numbers if needed, here and in other parts].
 The increase in benefit amounts for this target group alone is estimated to reduce the national
poverty rate substantially, from 5 percent to less than 4.8 percent, with the largest reductions
among targeted households and households with children in general. The policy change is
progressive, increasing household incomes more in the bottom of the income distribution.
 [For instance: two other hypothetical child assistance benefits were also modelled,
where… The results show that…]

Based on the Vietnam Household Living Standards Survey (VHLSS) of 2020, there are approximately
25.9 million children in Vietnam. Compared to households without children, families with children earn
substantially less income and fall more often below the national poverty line. More important to this
work, VHLSS data suggests that more than 125,000 children in Vietnam live without biological parents.
The poverty rate in households with these children is estimated at 8.7 percent, considerably higher
than the national poverty rate (5.0 percent). The average monthly income of these households is
around VND 2.6 million, substantially lower than the VND 4.1 million in the overall population. The
Vietnamese government is aware of these outcomes and increasingly alarmed about the welfare of
disadvantaged children, most recently exemplified by the increase in social benefits for this group.

This work illustrates how the recent increase in the level of social assistance provided for
disadvantaged children, namely those without a dedicated caretaker, influence poverty, incomes and
public spending in Vietnam. While orphan children cannot be readily identified from VHLSS data, we
proxy them by focusing on children without biological parents. The realistic number of orphans in
Vietnam is not clear, as estimates range from tens of thousands to a few hundred thousand children.
The degree of magnitude, however, is similar to the 125,000 children identified in VHLSS data who do
not have biological parents as their primary caregivers. At the same time, a report by MOLISA suggests
that around 1.5 millions children have benefited from the social assistance provided for disadvantaged
children–effects of the policy observed in this policy brief are hence lower bound estimates.

Vietnam increased social benefits for disadvantaged children in 2021

Despite its rapid socioeconomic development over the past few decades, Vietnam is still faced with
several social problems, including the large number of vulnerable people in need of monetary and
non-monetary support. Poor children, especially orphans and children without continuous nurture, are
arguably among the groups in need of most protection.

To address this challenge, and to better meet the basic rights of children, the Vietnamese Government
has enacted several social policies targeted at disadvantaged children and their families. Since 2013,
the government has provided a monthly social protection benefit of VND 270,000 (ca. USD 11) for
children without continuous nurture from parents (e.g., children with deceased, missing or incarcerated
parents). In many cases, the benefit levels under this policy were arguably not sufficient to meet the
beneficiaries’ basic needs.

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Addressing this concern, Decree 20/2021/ND-CP, which came into force in 1 July 2021, increased the
monthly benefit amounts by 33 percent to VND 360,000 (ca. USD 15). Families with young children and
or more than one child receive a larger monthly benefit based on “coefficients“established in the
Decree (e.g., a coefficient of 2.5 for children under 4 years of age, and 1.5 for children between 4 and
16 years of age). The law also applies similar benefit increases for other groups, including poor
students, elderly, disabled as well as selected poor households.

Increased levels of social assistance led to considerable decreases in poverty

As discussed, this work offers the first impact estimates of Decree 20/2021/ND-CP, focusing on the
increased benefits for disadvantaged children described above, and their budgetary and distributional
effects [add and describe two other reform scenarios here]. The analysis takes advantage of
VNMOD, the tax-benefit microsimulation model for Vietnam, comparing the different reforms to a
baseline scenario that assumes no policy changes in 2021. The results are shown in Table 1 [please fill
in the table by running the attached do-file using different model output files].

Table 1: Estimated effects on government budget, incomes, poverty and inequality, Vietnam, 2021
Baseline Reform #1 Reform #2 Combined
effect of
No policy changes Increase in benefits reforms #1, #2
[pension policy ‘off’
Increase in benefits
also, if you model that for children (plus 360 for the elderly (plus
and other Decree 20 per month) in policies 360 per month) in
policies] policies covered by
covered by Decree
20/2021/ND-CP Decree 20/2021/ND-
CP

Government budget

Total government 289,767 296,313 292,012 298,529

expenditure, VND (+6516) (+2,215) (+8,732)

billions

Poverty
Share of poor households 5.01 4.96 4.87 4.82
(poverty rate), % (- 0.14pp.) (-0.19 pp.)
(-0.05 pp.)
Share of poor households 5.88 5.81 5.75 5.68
among households with (-0.13 pp.) (-0.2 pp.)
children under 18, %
(-0.07 pp.)
Share of poor households 6.10 6.03 5.96 5.91
among households with (-0.07 pp.) (-0.14 pp.) (-0.14 pp.)
children under 16, % [take
from Stata]
Share of poor households 8.73 8.73 8.73 8.73
among households with (-0 pp.) (-0 pp.) (-0 pp.)
children under 16 without
parents, % [from Stata]

Incomes and inequality

Average disposable income, 4.09 4.09 4.09 4.09
all households, VND millions (-0 pp.) (-0 pp.) (-0 pp.)
per month [from Stata]
Average disposable income, 3.74 3.75 3.74 3.75
households with children (+0.01 pp.) (-0 pp.) (+0.01 pp.)
under 18 [from Stata]
Average disposable income, 3.70 3.701 3.70 3.71
households with children (+0.01 pp.) (-0 pp.) (+0.006
under 16 [from Stata]
pp.)

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Average disposable income, 2.57 2.67 2.58 2.68
households with children (+0.1 pp.) (+0.01 pp.) (+0.15 pp.)
under 16 without biological
parents [from Stata]
Gini coefficient, 0–100 35.07 35.01 35.02 34.96

(-0.06) (-0.04) (-0.09)

Notes: Changes from baseline are shown in brackets. Income amounts are in VND millions per month.

Source: Authors’ elaboration of simulations using VNMOD.

As shown in Table 1, the first reform (the realized increase in child benefits implemented in 2021)
comes with a cost of around VND 8,100 billion for the government (USD 340 million, or roughly 0.1
percent of GDP). The poverty rate among the whole population is estimated to decrease by 0.25
percentage points due to the policy change. The effects on the poverty rate in the target population,
households with children without parents, are even more encouraging; their poverty rate falls from 8.7
percent to X percent, while average disposable income per capita increases from VND 2.5 million to X
million [obtain and fill in these estimates by running the Stata file for each output dataset,
including baseline and reforms].

In the second reform, the simulations show that… In the third reform… The combined effects of all
reforms in the final column… [add and describe results from other reforms, including the
combined effect]

Reimagining social support for disadvantaged children

In recent years, social assistance policies in Vietnam have contributed to improving the social welfare
of vulnerable population groups, including especially disadvantaged children. Microsimulation
estimates using VNMOD suggest that the recent benefit increase for children without parents led to a
substantial decrease in poverty in 2021. Not surprisingly, the estimated effects were particularly large
for the households specifically targeted by the policies. [please edit based on further results from
other scenarios]

While the national social assistance regime has been gradually reformed over time, recent changes
have mainly comprised changes in benefit amounts and minor parameters related to eligibility. A more
comprehensive social policy reform would be warranted, perhaps with selective implementation of
policy approaches adopted in other countries. Such a reform would include improvements in
identifying the population groups in need of most support, and thereby substantially increasing the
number of social support beneficiaries, as well as complementing monetary support with resources for
targeted social work [needs specific details of what type of a comprehensive policy reform would
be needed and why; my suggestions here are also probably too general]

Policy recommendations

 The results of this note suggest that targeted monetary support to vulnerable children and
their households is a cost-effective policy alternative to reduce poverty in Vietnam…
 A more comprehensive reform of social policy would include…
 Benefits to disadvantaged children need to be aligned with better identification of beneficaries
and more resources for effective social work among disadvantaged… [these are just ideas; I
would do additional research to try to link your findings to key social policy challenges
in the country, and related policy proposals. Be specific!]

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This note is a product of the VNMOD developed in the framework of the VNMOD Retreat 2022. It is part of the activities of the
SOUTHMOD project.

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Guidelines

Policy Notes should have:

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 800-1500 words
 The notes are meant to provide relevant information and policy recommendations to policy
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Policy notes should include:

 Findings: 100-150 words, in bullet points, summarizing the main findings of the body text.
 Introductory paragraphs: 150-200 words, stating clearly the policy question, why it is
important, and any context that is important for the reader to have.
 Body text: 400-900 words, including 1-3 graphs, tables and/or images; descriptions of the
policy or policies simulated; discussion of the main results; and caveats of the results.
 Closing paragraphs: 50-100 words. Brings the text narrative to a close. Typically, the closing
paragraph or paragraphs will link the findings with the policy recommendations that will then
be summarized in the ‘Policy recommendations’ section.
 Policy recommendations: 100-150 words, in bullet points, summarizing the main messages of
what was already mentioned in the body text or closing paragraph and implications for policy.
 To the end: Statement:“This note is a product of the UGAMOD developed in the framework of the
UGAMOD Retreat 2022. It is part of the activities of the SOUTHMOD project.“

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