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

Abstract

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 Human Capital Earning Function (Mincer, 1974) 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.