Education expansion and its returns to education in Vietnam: a two-step Heckman model analysis

This study investigates the impact of educational expansion on the relationship between education and its economic returns as posited by the human capital theory. Specifically, we explore how the expansion of education affects the returns to higher levels of education relative to lower ones and examine gender differences across levels of education. To achieve these objectives, we use data from the Vietnam Household Living Standards Surveys (VHLSS) conducted between 2002 and 2014, encompassing a sample of 133,600 individuals. Our empirical findings, consistent with the human capital theory, show that higher levels of education are associated with increased monetary returns, even in the context of educational expansion. Nevertheless, we observe varied gender effects resulting from the expansion of education, particularly for individuals with no or primary education. Notably, women in these educational categories tend to earn lower wages than their male counterparts. In contrast, women who have attained tertiary education have higher wage premiums than men. Overall, this study's results support the human capital theory while emphasizing the significance of considering education as a positional good and recognizing the gender-specific impacts of educational expansion.