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Are Returns to Investment Lower for the Poor? (2000)
| Venue: | in rural Vietnam. The World Bank, Policy Research Working Paper # No.2425 |
BibTeX
@INPROCEEDINGS{Physical00arereturns,
author = {Human And Physical and Van De Walle and Alice Mesnard},
title = {Are Returns to Investment Lower for the Poor?},
booktitle = {in rural Vietnam. The World Bank, Policy Research Working Paper # No.2425},
year = {2000}
}
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Abstract
If the marginal gains from investment in physical capital depend positively on knowledge, but a household cannot hire skilled labor to compensate for low skills, then even if it has access to credit, the household will achieve lower returns than an educated household. If, as is common, the income-poor are less well educated because of credit market failure and living in areas with worse access to schooling, then the poor will also have lower returns to investments. The paper tests this argument for the case of irrigation infrastructure in Vietnam. It asks how a household's education level and demographics influence the household income gains from irrigating previously non-irrigated land. The net marginal benefit of irrigation increases strongly with the education of the household. The results suggest that unless disparities in education are redressed, market oriented reforms will generate an inequitable agricultural growth process in Vietnam.
Keyphrases
investment lower non-irrigated land credit market failure net marginal benefit inequitable agricultural growth process irrigation infrastructure educated household household cannot hire physical capital depend irrigation increase household income gain marginal gain low skill education level
