Thesis Public Defense | VNP28 - Đặng Nguyễn Minh Duy

The Impact of Overeducation on Wage

Student: Đặng Nguyễn Minh Duy, VNP-28

Supervisor: Dr. Trần Mỹ Minh Châu

Abstract:

The study uses data from the 2018 Vietnam Household Living Standard survey and the Vietnam Labor Force survey to examine the effect of education on wage in Vietnam. The findings implies that overeducation is negatively correlated to wage rate and is statistically significant. Using available data from both datasets mentioned above, this study check for robustness of OLS coefficient. Employing one instrumental variable relating to childhood neighborhood level of education, the study tries to address the endogenous relationship between wage and overeducation. The two stage least square estimate and test results indicates that the instrument is strong and exogenous, and the endogeneity between wage and overeducation leads to overestimation of overeducation. The study also tests for omitted variable bias, and the result shows that there are unobserved variables that also affect wage which leads to overeducation to be overestimated. Although the solution to solve the bias is not discussed within the scope of this study, it is among the first in this line of literature to address the omitted variable bias and empirically try to test for the existence of the bias.

Keyword: A14, Human capital theory, wage effect on education, overeducation