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External and private return to education by using of instrument variables approach: evidence in Vietnam with a panel data set

(A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS, VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS)

By Le Thanh Hung (VNP 21)

Academic Supervisor: Prof. Nguyễn Trọng Hoài



The combination of Vietnam Household Living Standard Survey and Provincial Statistics Yearbook from 2010 to 2014 provide a great opportunity for estimating the up to date external and private return to education in Vietnam. In this paper, the Mincer’s Human Capital Earning Function and instrument variables are adopted in order to estimate the external and private return to education. The analysis suggests that not only one additional schooling year have an impact on individual wage, but the increase in proportion of skilled workers in the labor force also have an influence on the hourly wage of individual.

Keywords: external return to education, micro approach, instrument variables.

Abbreviations: VHLSS - Vietnamese Household Living Standard Survey; GDP - Gross domestic product; PSY – Provincial Statistic Yearbook; HCEF – Human Capital Earning Function.

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Full version is available at Library of Vietnam- Netherland Progamme: 1A Hoang Dieu, Phu Nhuan Dist, Ho Chi Minh city, Vietnam.