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Does the Skill Premium Influence Educational Decisions? Evidence from Viet Nam

Author

Listed:
  • Ian Coxhead

    (University of Wisconsin-Madison and Institute of Developing Economies (IDE-JETRO), Tokyo)

  • Nguyen Dinh Tuan Vuong

    (University of Wisconsin-Madison)

Abstract

Viet Nam's economy has grown and changed in dramatic ways since WTO accession in 2007. Much of the growth and change is due to expanded international trade and FDI. These in turn have greatly increased domestic labour demand. However, growth that exploits the country's abundant supply of low-skill labour may depress the relative demand for skills. In this paper we ask whether the skill premium-the relative price of skills, which also measures the gross economic benefit to schooling at high school and beyond-plays an influential role in schooling decisions amongst teenagers for whom wage-work is an alternative to continued education. We first use event study methods to clarify trends in wages and skill premia. We then decompose influences on upper secondary school enrolments from income growth, demographic change, and skill premia. We find that the college skill premium has a positive influence on enrolments, whereas the premium from upper secondary completion has no significant effect. Our conclusions explore implications for future productivity growth as well as economic and educational policies.

Suggested Citation

  • Ian Coxhead & Nguyen Dinh Tuan Vuong, 2023. "Does the Skill Premium Influence Educational Decisions? Evidence from Viet Nam," Working Papers DP-2023-03, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2023-03
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Skill premium; wages; enrolments; Viet Nam;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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