Labour Market Returns to Higher Education in Vietnam

Doan, Tinh (2011): Labour Market Returns to Higher Education in Vietnam.

Abstract

This paper employs the Ordinary Least Squares, Instrumental Variables and Treatment Effect models to a new dataset from the Vietnam Household Living Standards Survey (VHLSS) to estimate return to the four-year university education in 2008. Our estimates reveal that the return to university education is about 17% (annualized) and robust to the various estimators. The return to higher education has significantly increased since the economic reform in late 1980s.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic transition; returns to higher education; IV model; Vietnam
• Subjects: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C31 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions ; Social Interaction Models

References

Angrist, J., & Krueger, A. (1991). Does compulsory schooling attendance affect schooling and earnings?. Quarterly Journal of Economics, 106(4), 979-1014.

Angrist, J., & Krueger, A. (1992). Estimating the payoff to schooling using Vietnam-era draft lottery (Working paper no. 4067). Cambridge, MA: National Bureau of Economic Research.

Angrist, J., & Pischke, J. (2009). Mostly harmless econometrics. Princeton and Oxford: Princeton University Press.

Angrist, J., Imbens, G., & Rubin, D. (1996). Identification of causal effects using instrumental variables. Journal of the American Statistical Association, 91(434), 444-455.

Arcand, J., d'Hombres, B., & Gyselinck, P. (2004). Instrument choice and the returns to education: New evidence from Vietnam. Retrieved from http://129.3.20.41/eps/lab/papers/0510/0510011.pdf

Ashenfelter, O., & Rouse, C. (1998). Income, schooling and ability: evidence from a new sample of identical twins. Quarterly Journal of Economics, 113, 253-284.

Ashenfelter, O., & Zimmerman, D. (1997). Estimates of the return to schooling from sibling data: fathers, sons and brothers. Review of Economics and Statistics, 79(1), 1-9.

Ashenfelter, O., Harmon, C., & Oosterbeek, H. (1999). A review of estimates of the schooling/earnings relationship, with tests for publication bias. Labour Economics, 6(4), 453-470.

Baum, C., Schaffer, M., & Stillman, S. (2003): Instrumental Variables and GMM: Estimation and Testing. Stata Journal, 3(1), 1-31.

Belzil, C. (2007). The return to schooling in structural dynamic models: a survey. European Economic Review, 51(5), 1059-1105.

Butcher, K., & Case, A. (1994). The effect of sibling sex composition on women’s education and earnings. The Quarterly Journal of Economics, CIX(3), 531-563.

Card, D. (1994). Earnings, schooling, and ability revisited (Working paper no. 4832). Cambridge, MA: National Bureau of Economic Research.

Card, D. (1995). Using geographic variation in college proximity to estimate the return to schooling. p.201-222, Aspects of labour market behavior: Essays in honour of John Vanderkamp.

Card, D. (1999). The casual effect of education on earnings. In Handbook of Labor Economics. Vol 3A, ed. By Ashenfelter, O., & Card, D. Amsterdam and New York: North Holland Publisher.

Card, D. (2001). Estimating the return to schooling: Progress on some persistent econometric problems. Econometrica, 69(5), 1127-1160.

Chatelain, J., & Ralf, K. (2010). Inference on time-invariant variables using panel data: A pre-test estimator with an application to the returns to schooling. Retrieved from http://hal-paris1.archives-ouvertes.fr/docs/00/49/20/39/PDF/Chatelain_Ralf_Time_Invariant_Panel.pdf

Conneely, K., & Uusitalo, R. (1997). Estimating heterogeneous treatment effects in the Becker schooling model (Unpublished discussion paper). Industrial Relations Section, Princeton University.

Doan, T., & Gibson, J. (2009). Do returns to schooling go up during transition? The not so contrary case of Vietnam (Working papers in economics no. 09/08). Retrieved from University of Waikato, Department of Economics website: ftp://mngt.waikato.ac.nz/RePEc/wai/econwp/0908.pdf

Donald, S., & Newey, W. (2001): Choosing the Number of Instruments. Econometrica, 69(5), 1161-1191.

Glewwe, P., & Jacoby, H. (2004). Economic growth and the demand for education: Is there a wealth effect? Journal of Development Economics, 74(1), 33-51.

Glewwe, P., & Patrinos, H. (1999). The role of the private sector in education in Vietnam: Evidence from the Vietnam Living Standards Survey. World Development, 27(5), 887-902.

Griliches, Z. (1977). Estimating the returns to schooling: Some econometric problems. Econometrica, 45(1), 1-22.

GSO. (2010). Population and Housing Census 2009, 1 April 2009 (Complete report and major findings, General Statistical Office). Hanoi, Vietnam.

Gujarati, D. (1995). Basic Econometrics. New York, London: McGraw-Hill, Inc.

Hausman, J., & Taylor, W. (1981). Panel data and unobservable individual effects. Econometrica, 44(6), 1377-1398.

Heckman, J., & Li, X. (2004). Selection bias, comparative advantage and heterogeneous returns to education: Evidence from China in 2000. Pacific Economic Review, 9(3), 155-171.

Hogan, V., & Rigobon, R. (2010, June). Using unobserved supply shocks to estimate the returns to education. Paper presented at the European Association of Labour Economists Conference at University College London, England. Retrieved from http://www.eale.nl/Conference2010/Programme/PaperscontributedsessionsI/add127862_ElgN5Qi516.pdf

Imbens, G., & Angrist, J. (1994). Identification and estimation of Local Average Treatment Effects. Econometrica, 62(2), 467-476.

Isacsson, G (1999). Estimates of the return to schooling in Sweden from a large sample of twins. Labour Economics, 6(1999), 471–489.

Kane, T., & Rouse, C. (1993). Labour market returns to two- and four-year colleges: is a credit a credit and do degrees matter? (Working paper no. 4268). Cambridge, MA: the National Bureau of Economic Research.

Keane, M. (2010). Structural vs. atheoretic approaches to econometrics. Journal of Econometrics, 156(1), 3-20.

Miller, P., Mulvey, C., & Martin, N. (1995). What do twins studies reveal about the economic returns to education? A comparison of Australian and U.S findings. American Economic Review, 85, 586-599.

Moock, P., Patrinos, H., and Venkataraman. (2003). Education and earnings in a transition economy: the case of Vietnam. Economics of Education Review, 22, 503-510.

Murray, M. (2006). Avoiding invalid instruments and coping with weak instruments. Journal of Economic Perspectives, 20(4), 111-132.

Musgrove, P. (1979). Permanent household income and consumption in urban South America. American Economic Review, 69, 355-368.

Nichols, A. (2009). Casual inference with observational data: Regression Discontinuity and related methods in Stata. Retrieved from http://repec.org/nasug2007/causal.pdf

Psacharopoulos, G., and Patrinos, H.A. (2004). Returns to investment in education: A further update. Education Economics, 12(2), 111-134.

Staiger, D., & Stock, J. (1997). Instrumental variables regression with weak instruments. Econometrica, 65(3), 557-586.

Stock, J. (2010). The other transformation in econometric practice: Robust tools for inference. Journal of Economic Perspectives, 24(2), 83-94.

Stock, J., & Yogo, M. (2005). Testing for Weak Instruments in Linear IV Regression. In Andrews, D & Stock, J (Eds), Identification and Inference for Econometric Models: Essays in Honor of Thomas Rothenberg (pp. 80–108). Cambridge: Cambridge University Press.

Stock, J., & Yogo. (2002). Testing weak instruments in linear IV research regression (NBER Technical working paper no. 284). Retrieved from the National bureau of Economic Research website: http://www.nber.org/papers/T0284

Stock, J., Wright, J., & Yogo, M. (2002). A survey of weak instruments and weak identification in generalized method of moments. Journal of Business & Economic Statistics, 20(4), 518-529.

VHLSS. (2008). Vietnam Household Living Standards Survey 2008 [Datasets and basic results]. General Statistic Office (GSO), Hanoi, Vietnam.

Wooldridge, J. (2002): Econometric Analysis of Cross-Section and Panel Data. Cambridge, MA: MIT Press.

Yakusheva, O. (2010). Return to college education revisited: is relevance relevant? Economics of Education Review, 29(2010), 1125-1142.