ERG SES D 08, Quality and Education
This is an exploratory study to estimate the rates of return to having higher education qualifications among wage earners in Vietnam. Using the hierarchical linear model (HLM), specifically adapting the Mincer internal rate of returns to education function and employing the data from the Vietnam Household Living Standard Survey (VHLSS) in 2012, the study found empirical evidence for higher rates of return to higher education qualifications. Adjusting for individual characteristics and the differences in the impacts of district types on the relationship between higher education qualifications and annual wage income and between economic sectors and income, there is not significant difference in the rates of return to higher education in different district types, although wage earners in urban districts are expected to have higher average income than those in non-urban districts. Nevertheless, it would be expected that the wage income gaps between public employees and workers in the private sector would be much smaller in urban districts than in non-urban districts. In other words, while higher education qualifications would be expected to offer higher private returns in both urban and rural areas, there is a differentiation in rates of return for workers in the public and private sectors in respective areas. The study offers an innovative application of the HLM model in estimating rates of return to higher education qualifications in the Vietnamese settings, which can be adapted to study other country cases. Furthermore, the results from the study suggest important policy implications regarding higher education provision and workforce development for Vietnam, specifically in terms of policies and incentives by local governments in attracting higher education qualification holders as well as expanding higher education provision.
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