Education, Health, and Wages:Evidence from Vietnam

This paper examines the joint role of education and health in wage determination and labour-force participation among Vietnamese working-age individuals, using pooled 2014-2020 Viet Nam Household Living Standards Survey data and a health-augmented Mincerian framework with Heckman selection correction. Comparing hourly and monthly wage specifications reveals a severity gradient in the healthrelated wage penalty: under the broad morbidity measure, poor health reduces monthly earnings by approximately 9% with no significant hourly wage effect, consistent with a reduction in working time; under the narrower bedridden-days measure of poor health, poor health also reduces hourly wages by approximately 7%, alongside a larger monthly wage penalty of approximately 16%, consistent with a productivity loss due to poor health among those who remain at work. Education does not significantly moderate the wage penalty but is positively associated with labour-force participation among severely ill individuals. Returns to education range from approximately 4.5% to 4.8% per additional year. The findings suggest that the economic cost of poor health in Viet Nam is severity-dependent and operates partly through labour-force attachment, with implications for policies addressing paid sick leave and social health insurance.