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Education and earnings in a transition economy (Vietnam)

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  • Moock, Peter R.
  • Patrinos, Harry Anthony
  • Venkataraman, Meera

Abstract

The transition from a centrally planned to a market economy is likely to have a strong impact on the labor market, on relative earnings, and on returns to education. Major economic reforms in Vietnam since 1986 (the policy known as"Doi Moi") have included a number of measures to liberalize the labor market. It is too soon to assess the full impact of these reforms, but the authors analyze the returns to education, on the basis of earnings in 1992-93 (collected in the first Vietnam Living Standards Survey). This represents one of the first country-wide analyses of the monetary benefits of schooling in Vietnam at a time when the labor market was in transition. On average, the estimated rates of returns are still relatively low, which is to be expected, since salary reforms were not introduced until 1993. Average private rates of return to primary education (13 percent) and university education (11 percent) are higher than those to secondary and vocational education (only 4 to 5 percent). Returns to higher education are slightly higher for women (12 percent) than for men (10 percent). Evidence from other transition economies suggests that returns are likely to increase as reforms in the labor market take full effect. The results support this hypothesis: Returns for younger Vietnamese workers (14 percent) are considerably higher than for older workers (only 4 percent). Implications for policymaking: 1) it is important to monitor future earnings and trends in the labor market, as updates of this analysis could provide more robust estimates of the transition's effects on earnings and returns to education. 2) At a time when the Vietnamese government is reassessing its pricing policy, the fact that private rates of return to higher education are relatively high suggests the potential for greater cost recovery. 3) Efforts to improve efficiency in secondary and higher education could increase the rate of return by lowering costs.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1920.

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Date of creation: 31 May 1998
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Handle: RePEc:wbk:wbrwps:1920

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Related research

Keywords: Teaching and Learning; Decentralization; Public Health Promotion; Health Monitoring&Evaluation; Curriculum&Instruction; Health Monitoring&Evaluation; Curriculum&Instruction; Gender and Education; Primary Education; Teaching and Learning;

References

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  1. Byron, Rayond P & Manaloto, Evelyn Q, 1990. "Returns to Education in China," Economic Development and Cultural Change, University of Chicago Press, vol. 38(4), pages 783-96, July.
  2. Gregory, R. G. & Meng, Xin, 1995. "Wage Determination and Occupational Attainment in the Rural Industrial Sector of China," Journal of Comparative Economics, Elsevier, vol. 21(3), pages 353-374, December.
  3. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, Elsevier, vol. 22(9), pages 1325-1343, September.
  4. Jamison, Dean T. & Van der Gaag, Jacques, 1987. "Education and earnings in the People's Republic of China," Economics of Education Review, Elsevier, Elsevier, vol. 6(2), pages 161-166, April.
  5. Orazem, Peter F. & Vodopivec, Milan, 1994. "Winners and losers in transition : returns to education, experience, and gender in Slovenia," Policy Research Working Paper Series 1342, The World Bank.
  6. meng, xin, 1995. "The role of education in wage determination in China's rural industrial sector," MPRA Paper 1343, University Library of Munich, Germany.
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Cited by:
  1. Abramitzky, Ran & Lavy, Victor, 2013. "How Responsive is Investment in Schooling to Changes in Redistributive Policies and in Returns?," CAGE Online Working Paper Series, Competitive Advantage in the Global Economy (CAGE) 150, Competitive Advantage in the Global Economy (CAGE).

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