Higher Education Expansion, Labor Market, and Firm Productivity in Vietnam

We examine the role of higher education on workers and firms by studying a national expansion of higher education in Vietnam, which established over 100 universities from 2006 to 2013. We collect a dataset on the timing and location of university openings and estimate that individuals' exposure to a university opening increases their chances of completing college by over 30%. It also raises their wage by 3.9% and household expenditure by 14%. At the market level, the expansion increases the relative supply of college-educated workers, thus reducing the college wage premium. It also raises firms' productivity and employment of college-educated workers. We also find that opening a university in one district has substantial spatial spillover effects on the labor market of nearby districts.