Return to schooling in Vietnam during economic transition: Does the return reach its peak?

Tinh Doan and John Gibson

MPRA Paper from University Library of Munich, Germany

Abstract: A common phenomenon about transition economies is that the return to schooling improves as economic reform progresses. Existing research suggests that Vietnam is not an exception to the pattern. However, the rate of return for the period 1992-1998 is still relatively low, below 5%, relative to that of the world and other transitional economies. In addition, it is hard to see a clear trend in the current literature due to different methods applied and sets of variables controlled in the earnings equations (see Appendix B). The low returns may result from the gradual economic reforms applied in Vietnam, whilst in Eastern European countries the “Big Bang” transformation was conducted. Therefore, to test whether the return to schooling in Vietnam is rising and reaches other transitional economies’ rate of returns, we re-examine the trend in the rate of return to schooling in Vietnam over the 1998-2008 period, when the reforms have had a longer time to have an effect. We apply the OLS and Heckman selection estimator (Maximum Likelihood approach) and find that the return has increased quickly during the later economic reform but its pace has slowed down when the return reached the global average rate of returns around 10%.

Keywords: economic transition; returns to schooling; Vietnam (search for similar items in EconPapers)
JEL-codes: J31 O15 (search for similar items in EconPapers)
Date: 2010, Revised 2010-10-19
New Economics Papers: this item is included in nep-lab and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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