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Instrument Choice and the Returns to Education: New Evidence from Vietnam

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Author Info

  • Jean-Louis Arcand

    (CERDI-CNRS, University of Auvergne & European Development Network)

  • Béatrice d'Hombres

    (CERDI-CNRS, University of Auvergne & University of Padua)

  • Paul Gyselinck

    (CERDI-CNRS, University of Auvergne)

Abstract

This paper focuses on instrument choice while consistently estimating the returns to education in Vietnam. Using data culled from the 2 rounds of the Vietnam Living Standards Survey (VLSS), we explore different sets of exogenous instruments that rely on demand and supply side sources of variation in schooling as well as the matrix of instruments proposed by Hausman and Taylor (1981). Instrument validity tests suggest that many variables do not satisfy the necessary conditions allowing them to be used as instruments. As in several studies, we find that IV estimates of the returns to education are substantially higher than the corresponding OLS estimate. We show how the Hausman-Taylor matrix of instruments, when combined with other instruments, may be a useful way of consistently estimating an average return to education rather than a local average treatment effect (Angrist, 1994).

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File URL: http://128.118.178.162/eps/lab/papers/0510/0510011.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0510011.

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Length: 22 pages
Date of creation: 11 Oct 2005
Date of revision:
Handle: RePEc:wpa:wuwpla:0510011

Note: Type of Document - pdf; pages: 22
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Web page: http://128.118.178.162

Related research

Keywords: ate of return; instrumental variables procedures; Instrument choice; Hausman-Taylor estimator; Hahn-Hausman test; Vietnam;

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References

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Cited by:
  1. Arabsheibani, Reza & Staneva, Anita V., 2012. "Returns to Education in Russia: Where There Is Risky Sexual Behaviour There Is Also an Instrument," IZA Discussion Papers 6726, Institute for the Study of Labor (IZA).
  2. Simone Balestra & Uschi Backes-Gellner, 2013. "Heterogeneous Returns to Education Over Wage Distribution: Who Pro ts the Most?," Economics of Education Working Paper Series 0091, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Dec 2013.

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