Return to schooling in Vietnam during economic transition: Does return to schooling in Vietnam reach its peak?
AbstractA common phenomenon about transition economies is that the return to schooling improves as economic reform progresses. Existing research suggests that Vietnam is not an exception to the pattern. However, the rate of return in period from 1992 to 1998 is still relatively low, below 5 percent, relative to that of the world and other transitional economies. And it is hard to see a clear trend in the current literature due to different methods applied and sets of variables controlled in the earnings equations (see Appendix B). The low returns may result from the gradual economic reforms applied in Vietnam, whilst in Eastern European countries the “Big Bang” transformation was conducted. Therefore, to test whether the return to schooling in Vietnam is rising and reaches other transitional economies’ rate of returns, we re-examine the trend in the rate of return to schooling in Vietnam over the 1998-2008 period, when the reforms have had a longer time to have an effect. We apply the OLS and Heckman selection estimator (Maximum Likelihood approach) and find that the return has increased quickly during the later economic reform but its pace has slowed down when the return reached the global average rate of returns at somewhere between 9 and 10 percent.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24986.
Date of creation: 21 Apr 2010
Date of revision: 30 Aug 2010
economic transition; returns to schooling; Vietnam;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-25 (All new papers)
- NEP-DEV-2010-09-25 (Development)
- NEP-EDU-2010-09-25 (Education)
- NEP-LAB-2010-09-25 (Labour Economics)
- NEP-SEA-2010-09-25 (South East Asia)
- NEP-TRA-2010-09-25 (Transition Economics)
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