Return on Education in Two Major Vietnamese Cities

Abstract

To maintain its sustainable productivity growth, Vietnam needs to upgrade its education system. Although studies have examined the return on schooling in Vietnam, none have focused on Hanoi (the capital) or Ho Chi Minh (the biggest economy), which differ markedly from the rest of the country in terms of their levels of education and development. We address this gap in the literature using an extended version of the classic Mincerian human capital equation and data from the latest Vietnam Household Living Standard Survey (2016). The Heckman two-stage method is used to address selection bias. In the two cities, there is no wage premium for people with a general education. Thus, workers need to earn at least a vocational degree to increase their wages significantly over those of people with a general education. In general, Ho Chi Minh offers higher salaries (4.45%) and tends to reward experience, whereas Hanoi pays more for an additional year of education (1.95%). Therefore, Vietnam should promote vocational education and develop a more open, flexible system that is less dependent on credential hiring, especially in the public sector. Lastly, we highlight the need to study returns on sustainable education in specific economic regions in Vietnam.

Does Vocational Education Pay Better, or Worse, than Academic Education?

“…Using the 2017 Household Labour Force Survey in Turkey, Patrinos et al (2021) find that returns to academic upper secondary education pays better than vocational upper secondary education in Turkey, whereas Psacharopoulos and Patrinos (2018) find the opposite. Choi et al (2019) find that employers in one Vietnamese city appreciate work experience more than they do the level of education, whereas employers in a different city put higher weight on the level of education. Using Mincerian equation and census data from 1983 in Isreal, Neuman and Ziderman (1991) find that vocational education, when matched with occupation, relates to a 10% increase in earnings compared to academic education.…”

Investigating the relationship between benevolent leadership and the organizational citizenship behaviour of academic staff: The mediating role of leader-member exchange

“…The study was conducted in the context of Vietnamese higher education, which has been changing fundamentally and comprehensively to support the country’s socio-economic development (Pham et al, 2019) and meet requirements for the internationalization of higher education in a globalized context (Hoang et al, 2018). Moreover, within Vietnam, Ho Chi Minh City is the biggest city in terms of population, and also an educational centre (Choi et al, 2019). Thus, Ho Chi Minh City was a suitable choice to collect empirical data.…”

The returns to education and wage penalty from overeducation: New evidence from Vietnam

“…The returns to education of those working in the state-owned economic sector are 0.077 and 0.049 for 1-and 2-year cohorts, respectively, which are higher than those working in private sectors (0.061 and 0.039) and other economic sectors (0.044 and 0.024). As most educated workers work in the public sector, workers with no or low education either work in their household businesses or firms in the private sector (Choi et al, 2019); this could explain why workers in the state-owned economic sector have higher wage premiums. Table 8 presents the returns to education based on regions of residence.…”

“…Doan et al (2018) mentioned that the decreasing trend of returns to schooling in Vietnam might arise from the increasing supply of high school and university graduates. Choi et al (2019) examined the returns to education in the two largest cities in Vietnam: Hanoi and Ho Chi Minh City. Their findings indicate that returns to education are different between the two cities.…”