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Return on Education in Two Major Vietnamese Cities

Daeheon Choi (), Chune Young Chung () and Ha Truong ()
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Daeheon Choi: College of Business Administration, Kookmin University, Seoul 02707, Korea
Chune Young Chung: School of Business Administration, Chung-Ang University, 84 Heukseok-ro, Dongjak-gu, Seoul 06974, Korea
Ha Truong: Siemens Healthineers, Dong Da District, Hanoi 153213, Vietnam

Sustainability, 2019, vol. 11, issue 18, 1-30

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.

Keywords: return on schooling; Vietnamese education system; Hanoi; Ho Chi Minh City; Vietnamese labor market; sustainable economic growth (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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