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Vocational education in Thailand: A study of choice and returns

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 Economics of Education Review 22 (2003) 99–107
www.elsevier.com/locate/econedurev

Vocational education in Thailand: a study of choice and

returns
a,* b
Thammarak Moenjak , Christopher Worswick
a
Monetary Policy Group, Bank of Thailand, 273 Samsen Rd., Pranakorn, Bangkok 10300, Thailand
b
Department of Economics, Carleton University, 1125 Colonel by Drive, Ottawa, Ont. K1S 5B6, Canada

Received 18 February 2000; received in revised form 5 June 2001; accepted 30 August 2001

Abstract

This study adds new evidence to the debate on the relative benefits of upper secondary vocational education and of
general education at the same level. Using a probit model, the study finds that an individual from a well-to-do family is
more likely to undertake vocational education. After correcting for possible self-selection, the study also finds vocational
education to give higher earnings returns than general education does. These findings call into question the belief that
vocational education has been overvalued and that providing general education to the workforce followed by on-the-
job training would provide more benefits. Indeed, the study suggests that an investment to improve the access to
vocational education might prove more beneficial.
 2001 Elsevier Science Ltd. All rights reserved.

JEL classification: I20; I21; I28

Keywords: Rate of return; School choice

1. Introduction vocational education level gives higher returns than does

This paper aims to identify the factors that influence
an individual’s choice between vocational and general
education in Thailand as well as the relative returns
between these two types of education at the upper sec-
ondary level. Since the 1970s there have been various
studies that examined an individual’s choice and the rela-
tive returns to each type of program. The findings,
especially with respect to the relative returns, however,
have been inconclusive.
Hollenbeck (1993) found the returns to post-secondary
vocational education in 1972 in the United States to be
significant for women but not for men. Trost and Lee
(1984), on the other hand, found that in the United States
in 1973, technical education at the upper secondary
* Corresponding author.
E-mail address: thammarm@bot.or.th (T. Moenjak).
upper secondary general education at least for men.
(Trost and Lee (1984) did not evaluate the returns to
technical education for women.)
To investigate the factors that influence an individ-
ual’s choice between the two types of education, the
paper first estimates a probit model of education choice
before proceeding to estimate the relative returns to the
two types of education using a self-selection corrected
earnings model. The results from the analysis should pro-
vide interesting insights with regard to vocational edu-
cation in an industrializing country.
1.1. Overview of Thailand’s secondary education
Throughout Thailand, primary education is compul-
sory. Individuals are required to enroll in a primary
school for at least 6 years from age 7 (Office of the
National Education Commission, 1997a). Secondary
education, on the other hand, is non-compulsory and is

0272-7757/02/$ - see front matter  2001 Elsevier Science Ltd. All rights reserved.
doi:10.1016/S0272-7757(01)00059-0
100 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107
divided into two levels. Lower secondary education
covers grades 7 to 9. Lower secondary education aims
to equip students with literary and numerical skills that
would make them competent workers in non-specialized,
non-manual jobs, or prepare them for further education
levels. Students must complete lower secondary edu-
cation before continuing on to upper secondary edu-
cation (grade 10 to grade 12).
At the upper secondary education level, students can
choose between two streams of education; namely, the
general (or academic) stream and the vocational (or
technical) education stream. Access to both streams of
upper secondary education is rather open, with similar
admission criteria.1 The number of places available for
general education, however, exceeds that for technical
education (Office of the National Education Com-
mission, 1997a). Regardless of their choice, once they
finished grade 12, the graduates from both streams are
considered equally qualified to sit for national university
examinations (Office of the National Education Com-
mission, 1997a).
Upper secondary general education, other than prepar-
ing students for further education, also aims to equip the
students with basic skills that would make them com-
petent workers in general non-manual jobs such as office
workers. Upper secondary vocational education, on the
other hand, while also preparing students for technical
studies in tertiary institutions, aims to equip them with
specialised technical skills that are deemed essentials for
jobs that require relatively highly specialised skills such
as those for mechanics, electricians, as well as business
skills such as bookkeeping (Office of the National Edu-
cation Commission, 1997a).2
2. The data
For the estimation of the probit choice model and the
earnings equation, the paper uses data from Thailand’s
Labor Force Survey for the years 1989 to 1995 inclusive.
The survey is conducted annually by the National Stat-
1
The costs of upper secondary vocational education are on
average higher than those of general education at the same level
are. In this study, however, we do not have information on the
exact costs of study for each of the individuals. The estimation
of the returns to education, hence, is performed with the con-
ventional assumption that, on average, student earnings plus
scholarships roughly paid for tuition. (See Leibowitz, 1974;
Mincer, 1974, for details.)
2 be different for those who do and those who do not live
Some vocational schools also offer agricultural studies.
The proportions of vocational school students enrolled in agri-
cultural studies, however, have always been very small. In
1994, for example, less than 5% of vocational school students
enrolled in agricultural studies (Office of the National Edu-
cation Commission, 1997b).
istical Office of Thailand. The sample for each Labor
Force Survey is drawn randomly from different house-
holds throughout the country. Records of the question-
naires available to the public start from the survey
year 1989.
In the analysis, the sample is pooled from the records
of those individuals who were not attending school and
were between 15 and 60 years of age at the time of the
survey. The sample used for the first-step probit analysis
is restricted to those individuals who reported having
upper secondary vocational or upper secondary general
education as the highest level of education, and whose
relevant information on parental education and parental
occupation is not missing. For the second-step evaluation
of the individuals’ earnings the sample is further restric-
ted to those who reported their earnings and were
employed at the time of the survey. Table 1 shows the
descriptive statistics of our sample.
Note that for our analysis, the sample is restricted to
individuals who are sons or daughters of the household
heads. Data from Thailand’s Labor Force Survey do not
explicitly contain information on parents. Information on
parents is important in our analysis as it could reflect the
individual’s socioeconomic status, a possible determi-
nant of his/her education choice. To obtain parental
information, observations of children are thus matched
with those of the individuals from the same household
who reported having a parents–children relationship.
(The only parents–children relationship reported in the
Labor Force Survey is that of the household heads,
household head’s spouse and their children.) The
resulting sample used in this paper, hence, consists of
only those who are the sons or daughters of the house-
hold heads. Individuals who did not live with their par-
ents at the time of the surveys are completely excluded
from our estimation. Such exclusion suggests that our
sample is a selected group, especially if those who live
with parents tend to be those who cannot afford to live
apart on their earnings.
While the possible sample-selection issue is undeni-
ably real, it should not, however, seriously affect the
ability of our analysis to address the main questions of
the paper. First, since one of our main concern is to
evaluate returns to vocational education as compared to
general education at the upper secondary level, our sam-
ple is large enough to give a good idea of the relative
returns between these two types of education at that
level, at least for those in the survey who were living
with parents. In any case, there is no reason to expect
that the relative returns to these types of education would
with their parents. Even if we assume that an individual
lives with his parents only if he/she can not afford to
live on his/her earning, there is no a priori reason to
believe why, ceteris paribus, an individual with a parti-
cular type of education is less likely to be able to afford
 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107 101

Table 1 ate the individual’s relative probabilities of attaining one

Descriptive statistics. Sample means and standard deviations type of education over another.
(standard deviations in parentheses) Second, as argued by Bedi and Gaston (1997), given
the prevalence of ‘joint’ families in developing countries,
Variable Males Females
the individuals may simply live with their parents out of
Sample size (N) 2633 2252 convenience in location or because they are participating
Education attainment in family enterprises.3 Unlike western countries where
Vocational education 0.435 0.444 nucleus families are more widespread, ‘joint’ families in
(0.495) (0.497) Thailand remain relatively common. Individuals may
Work characteristics live with parents even after they are married and have
Experience 5.718 5.268 children of their own. Since the Labor Force Survey do
(4.574) (4.454) not indicate who are the ‘breadwinners’ of the families,
Hourly earnings it is premature to assume that all the individuals living
Baht 18.890 17.716 with their parents are still subsidized by their parents
(13.052) (14.379)
incomes (and all those who are not living with their par-
Region of residence
North 0.165 0.150 ents are not). Cultural norm dictates that many of the
(0.372) (0.358) individuals in our sample could actually be providing for
Northeast 0.227 0.235 their parents (who may have long retired, since the
(0.419) (0.424) maximum individual’s own age in our sample reaches
Middle 0.319 0.324 60).
(0.466) (0.498) With the two reasons given above, there is no a priori
Bangkok 0.123 0.130 reason to believe that estimation results of the paper
(0.328) (0.337) would not at least partly reflect the relative probabilities
Area of residence of the individual’s education choice and the relative
Municipal area 0.437 0.460
returns to the different types of education for those of
(0.496) (0.498)
Sanitary district 0.298 0.291 the general population. Admittedly, until large-scale data
(0.457) (0.454) that include parental information become available for
Marital status Thailand, this sample selection issue remains real.
Married 0.222 0.265
(0.415) (0.441)
Divorced, separated, widowed 0.011 0.038 3. Theoretical model
(0.104) (0.192)
Migration status 0.279 0.246 According to Mincer (1974), earnings determinants
Migrant (0.449) (0.430) could be estimated using the following functional form:
No. of family members
More than five 0.366 0.398 ln wi⫽b⬘Xi⫹dVi⫹ei. (1)
(0.481) (0.489)
Survey year after 1991 where lnwi is the log of hourly earnings of individual i;
After 1991 0.688 0.666 Xi is a vector of personal, and background characteristics
(0.463) (0.471) of individual i, Vi is a vector of the individual i’s edu-
Birth cohort cational attainment, and ei is the random disturbance
B1965–69 0.384 0.385 term.
(0.486) (0.486) Griliches (1977), however, pointed out that the coef-
B1970–74 0.332 0.332 ficient estimates of the OLS estimation of the classical
(0.471) (0.471) model could suffer from what is now commonly known
B1975 AND AFTER 0.068 0.088
as ‘self-selection bias’. When the individual’s back-
(0.252) (0.284)
ground and ability ‘dictate’ his/her educational attain-
ment, the individual is said to be ‘self-selected’ into that
particular educational attainment. If educational attain-
ment of an individual is at least partly determined by the
living out on his/her own. Indeed, our descriptive stat- individual’s abilities and family backgrounds, estimating
istics below show that, for both men and women, the classical earnings equation without taking into
vocational school and general school graduates are rep-
resented roughly equally in our sample. This relatively
even distribution reflects the situation in the total survey 3
An example of a ‘joint family’ is a family where the famil-
population. The reason presented here also applies to the ies of the children of the household head reside together in a
fact that the other main concern of the paper is to evalu- household.
102 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107
account the possibility that family background and
ability might influence educational attainment could give
biased results. The significant magnitudes of coefficient
estimates of education variables might at least be partly
attributable to the individual’s background and ability
rather than returns to education per se.
For the investigation on the returns to vocational edu-
cation in Thailand, we correct for the possibility that the
estimated relative returns to education might at least be
partly attributable to the factors that influenced the indi-
vidual’s choice of education by using the standard two-
stage procedure with inverse Mills ratio.
4. Econometric specification
4.1. First stage probit choice model
For the first stage probit choice model, our dependent
variable takes a value of 1 if the individual’s choice of
upper secondary education is a vocational one, and takes
a value of 0 if upper secondary general education is
chosen. The explanatory variables included in the vector
Zi include parental education, parental occupation, region
of residence, area of residence, and the number of house-
hold members. All of the explanatory variables, except
number of household members take the form of zero–
one dummy variables.
For our estimation, father’s and mother’s educational
attainment dummy variables are used as proxies for
household socioeconomic status.4 In our context, we
would expect higher parental educational attainment to
imply higher socioeconomic status. Furthermore, in the
case where ability is partially attributable to genetic mar-
kings, and that education attainment is partly attributable
to individual’s ability, parental education variables also
proxy for the individual’s ability.
In our model, father’s and mother educational attain-
ment dummy variables are entered separately. The
father’s education dummy variable takes a value of one
if father’s highest level of education attainment is higher
than primary education, and zero otherwise. The same is
true for mother’s education dummy variable. In their
work, Behrman and Wolfe (1984), Chiswick (1986) and
Heckman and Hotz (1986) all argued that mother’s edu-
cation (rather than father’s) might have more significant
4
Note that the terms ‘father’ and ‘mother’ used in this thesis
are actually ‘household head’ and ‘spouse of the household
head’. The terms ‘father’ and ‘mother’ are used here because
they are less cumbersome and more informative in our context.
The sample used in this thesis consists of only the sons and the
daughters of the household head. In any case, more than 90
percent of the household heads with spouse present in the data
are males (and hence the ‘father’ term is not entirely
inappropriate).
impact on the individual’s education decision, as it was
often the mother who provided the learning environment
for her child.
Other than parental education, household head’s occu-
pation (or ‘father’s’ in our context) can also reflect the
socioeconomic status of the household. Here we classify
the different occupations reported in the Labor Force
Survey into three separate groups. White collar includes
professional and managerial occupations. Blue collar and
crafts includes clerical, sales, traders and craftsmen.
Menial includes farmers, agricultural workers, and ser-
vice providers. Socioeconomic status is assumed to rank
in descending order from white collar, blue collar and
crafts, and menial, respectively.
Since certain individuals might have migrated between
the time of education and the time of the survey, in the
case of these individuals, the reported region/area of resi-
dence might not be the same as the actual region/area of
upbringing. To account for this possibility, if the period
of residing in the reported residence was less than the
potential experience, we use the reported prior region
and area of residence as the region and area of upbring-
ing instead.5
4.2. Second stage earnings equation
The dependent variable used is the log hourly earn-
ings. Hourly earnings are used because other measures
of earnings (for example, daily or monthly earnings) do
not factor out the ‘labour supply’ effect. An individual
might report having received higher monthly earnings
simply because, ceteris paribus, he/she simply supplied
more labour. Hourly earnings, hence, are a better meas-
ure for our estimation purpose. For our estimation, the
log of hourly earnings is used as the dependent variable
instead of hourly earnings because it reduces the effects
of earnings outliers.
To evaluate the returns to vocational education in
Thailand, a dummy variable indicating if the individual
has completed vocational education is included in the
model. The dummy variable takes a value of one if the
individual has completed upper secondary vocational
education and a value of zero if the individual is an upper
secondary general graduate.
Experience variables are included in the model since,
ceteris paribus, workers with more years of job experi-
ence are likely to earn more. (Higher experience is often
associated with higher skills and higher productivity.) A
firm is likely to use higher wages to induce experienced
workers to stay on in their jobs, as the cost of training
new workers could be very expensive. With the higher
wages, the firm makes the workers’ costs of leaving the
5
Regions and areas of residence are classified according to
those done in the Labor Force Survey.
 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107 103

firm high. To capture the relationship between experi- Table 2

ence and earnings, we include two experience variables, Probit maximum likelihood estimation of the decision to under-
namely potential experience and potential experience take vocational educationa
squared. The potential experience squared variable is
Variable Males Females
included in addition to the potential experience variable
to capture the possibility of a non-linear relationship Constant ⫺0.348** ⫺0.192 (p-
between experience and earnings. value=0.11)
Note here that for our estimation, potential experience (0.107) (0.117)
is included instead of actual experience because the Lab- Father’s education
our Force Survey data we use reports neither the work- More than primary 0.253** 0.111
ers’ actual experience on their current job nor in their (0.068) (0.076)
former jobs. To control for the relationship between Mother’s education
experience and earnings, hence, we use potential experi- More than primary 0.046 0.011
ence variable (measured in years) as a proxy for the (0.075) (0.081)
Father’s occupation
actual experience. Note that potential experience is
White collar 0.187** 0.182**
defined here as the age reported at the time of the survey (0.060) (0.068)
minus the age left school. Blue collar 0.272** 0.296**
Other dummy variables included in the model include (0.069) (0.071)
those proxy for regions and areas of residence, marital Region of upbringing
status, migration status, birth cohort, and sample year. North 0.116 ⫺0.269**
(0.107) (0.118)
Northeast ⫺0.052 ⫺0.285**
5. Empirical results (0.099) (0.106)
Middle 0.312** 0.222**
(0.085) (0.092)
5.1. First stage probit equation
Bangkok 0.343** 0.507**
(0.106) (0.116)
Table 2 presents maximum likelihood estimation Area of upbringing
results showing the relationship between background Municipal area 0.180** 0.085
characteristics and the decision, for men and women, to (0.072) (0.078)
undertake upper secondary vocational education versus Sanitary district 0.006 ⫺0.138*
general education at the same level. (0.073) (0.078)
From Table 2, we can see that for both men and No. of family’s members
women, socioeconomic status as measured by father’s More than five ⫺0.071 0.023
occupation, plays a significant role in influencing the (0.053) (0.056)
Survey year
individual’s choice of upper secondary education. Cet-
After 1991 ⫺0.003 ⫺0.025
eris paribus, males and females from a higher economic (0.058) (0.061)
status are more likely to undertake vocational education. Birth cohort
For both men and women, as compared to having father B1965–69 ⫺0.294** ⫺0.218**
in a menial occupation, having father in a white collar (0.074) (0.083)
or a blue collar occupation significantly increases the B1970–74 ⫺0.303** ⫺0.274**
probability of undertaking vocational education. (0.080) (0.088)
With regard to father’s education, for men, father’s B1975 AND AFTER ⫺0.559** ⫺0.193 (p-
educational attainment being higher than primary level value=0.112)
significantly increases the probability of undertaking (0.124) (0.122)
Log likelihood ⫺1726.048 ⫺1452.148
vocational education. Such a result further confirms that,
c2 (d.f.=15) 154.250** 189.829**
at least for men, ceteris paribus, an individual from a
higher socioeconomic status is more likely to undertake a
**Significant at 5% level; *significant at 10% level.
upper secondary vocational education (as opposed to
general education at the same level).
For both men and women, being raised in a more pros-
perous region of the country (the middle region or Looking at the cohort effects, it appears that
Bangkok) significantly increases the probability of vocational education has become less popular for indi-
undertaking vocational education. For women, on the viduals from the more recent cohorts. For both men and
other hand, being raised in a poorer region (eg. the north women, being born after 1969 significantly decreases the
or the north or the northeast) also decreases that prob- probability of undertaking vocational education, ceteris
ability. paribus. The coefficient estimates of the dummy vari-
104 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107
ables for 1970–1974 and 1975 and after are all negative
and significant for both men and women.
At the first glance, these results for men and women
seem to suggest that, while vocational education has
been advocated by the government as a crucial provider
of skills for the industrialisation of the country,
vocational education itself has become increasingly less
popular among the new cohorts of population. On the
other hand, our estimates here might have neglected the
fact that increased access to higher education could have
led more vocational school graduates to undertake ter-
tiary education. Since the information on those
vocational school graduates who continued on to higher
education is not available in the Labour Force Surveys
(and hence our sample), we cannot further investigate
this point.
5.2. Second stage earnings equation
From Table 3, we can see that, for both men and
women, upper secondary vocational education gives sig-
nificantly higher earning returns than does upper second-
ary general education. Indeed, as compared to general
education at the same level, upper secondary vocational
education gives higher earnings returns by 63.9 percent
for men and 49.4 percent for women.
Possible explanations for such results include compen-
sating wage differentials as well as increased demand for
the skills provided by upper secondary vocational edu-
cation due to the industrialisation process. According to
compensating wage differential story, the nature of the
jobs normally taken by upper secondary vocational edu-
cation graduates might differ from those normally taken
by their upper secondary general education counterparts
in such a way that the employers are willing to pay the
vocational school graduates more. (For example, jobs
normally taken by vocational school graduates such as,
say, mechanics, may be more physically demanding,
more hazardous, and more specialised that the employers
are willing to pay wage premiums to their employees.)
On the other hand, with the rapid industrialisation pro-
cess going on in the economy, employers in the indus-
tries may be willing to pay wage premiums to retain the
workers with the technical skills provided by
vocational education.
For both men and women, the concavity of the
relationship between potential experience and earnings
is not confirmed. For both men and women, while the
parameter estimates of the potential experience dummy
variables are positive and significant at the one percent
level, the potential experience squared variables, though
negative, are statistically insignificant. Our results here
differ from the results found by earlier studies on the
returns to education (see, for examples, Bellew and
Moock, 1990; Tansel, 1994; Gaston and Sturm, 1991).
One possible explanation for the non-concavity in our
case could be the inclusion of the birth cohort variables
in our estimation. The way we define them, birth cohort
variables are highly correlated with potential experience
and hence could take out some of the explanatory vari-
ables of the potential experience squared variables. Also,
since our sample includes many of the relatively young
individuals (those still living with parents) the dimin-
ishing effects of the returns to experience might still be
relatively weak.
With regard to self-selection effect, for both men and
women, the parameter estimates of the self-selection cor-
rection terms (hi) are negative. For men, the parameter
estimate is significant at the 10 percent level. For
women, the p-value of the estimate is at 10.6 percent
level. The negative signs of the dummy variables suggest
that if the general education graduates had indeed chosen
vocational education, they are not likely to earn less than
what the vocational education graduates earn, ceteris par-
ibus.
Table 3 also shows the results from the OLS esti-
mation of Mincer’s classical earnings model. The main
difference between the results from the OLS estimation
and the self-selection correction model lie in the differ-
ences in the estimates of the relative returns to upper
secondary vocational education as compared to general
education at the same level.
According to the OLS estimates of the Mincer earn-
ings model, as compared to general education at the
same level, upper secondary vocational education gives
higher earnings returns by 23.8 percent for men and 20.7
percent for women (see Table 3). Both of the OLS esti-
mates of the vocational education dummy variables are
significant at the one percent level. After taking account
of the possible self-selection, however, the returns to
vocational education are found to be higher than those
for general education by 63.9 percent for men and 49.4
percent for women respectively. The coefficient esti-
mates of the vocational education dummy variables in
the self-selection corrected model estimation are signifi-
cant at the one percent level for both men and women.
While the magnitudes of the estimated returns rise dra-
matically after the self-selection correction procedure, it
must be kept in mind that our rather selected sample
could play a role for such a rise. Until a more complete
set of data becomes available, the dramatic rise in the
magnitudes of the estimated relative returns to vocational
education remains in question. However, with the high
statistical significance of the vocational education
dummy variables and the self-selection variables, it is
still very reasonable to conclude that, for our analysis,
after correcting for self-selection, returns to vocational
education remain higher than those to general education.
Other results from the OLS and the self-selection cor-
rected estimations appear to agree in general. The signs
and the magnitudes of all the other variables appear simi-
lar, even though some of significance levels of the para-
 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107 105

Table 3
Estimated earnings equations (corrected standard errors in parentheses for self-selection corrected results, and normal standard errors
for OLS results)a

Variable Males Males Females Females

(self-selection (OLS) (self-selection (OLS)
corrected) corrected)

Constant 1.830** 2.003** 1.578** 1.707**

(0.098) (0.102) (0.124) (0.108)
Work characteristics
Experience 0.062** 0.609** 0.070** 0.068**
(0.009) (0.013) (0.012) (0.014)
Experience squared ⫺0.0003 ⫺0.0003 ⫺0.0004 ⫺0.0003
(0.0003) (0.0004) (0.0005) (0.0005)
Education attainment
Vocational education 0.639** 0.238** 0.494** 0.207**
(0.146) (0.028) (0.180) (0.031)
Region of residence
North ⫺0.017 ⫺0.005 0.155** 0.131**
(0.038) (0.051) (0.053) (0.057)
Northeast ⫺0.089** ⫺0.090* 0.283** ⫺0.262**
(0.039) (0.053) (0.052) (0.057)
Middle 0.157** 0.192** 0.384** 0.403**
(0.036) (0.045) (0.045) (0.049)
Bangkok 0.366** 0.404** 0.460** 0.508**
(0.043) (0.054) (0.059) (0.058)
Area of residence
Municipal area ⫺0.092** ⫺0.055 ⫺0.094** ⫺0.074*
(0.032) (0.040) (0.039) (0.042)
Sanitary district 0.031 0.038 ⫺0.007 0.011
(0.031) (0.041) (0.038) (0.043)
Marital status
Married 0.043* 0.036 ⫺0.003 ⫺0.003
(0.026) (0.035) (0.035) (0.040)
Divorced, separated, widowed ⫺0.244** ⫺0.249* ⫺0.251** ⫺0.250**
(0.098) (0.137) (0.074) (0.086)
Migration status
Migrant ⫺0.111** ⫺0.087** ⫺0.057 ⫺0.029
(0.032) (0.042) (0.046) (0.049)
Survey year
After 1991 0.228** 0.229** 0.212** 0.208**
(0.032) (0.043) (0.041) (0.046)
Birth cohort
B1965–69 0.069 0.031 0.105* 0.090
(0.045) (0.057) (0.061) (0.068)
B1970–74 0.153** 0.115 0.260** 0.237**
(0.065) (0.087) (0.087) (0.098)
B1975 AND AFTER 0.221** 0.140 0.485** 0.468**
(0.096) (0.126) (0.116) (0.132)
Self-selection term
hI ⫺0.251** ⫺0.178
(0.091) (0.110)
Adjusted R-squared 0.307 0.305 0.294 0.292

a
**Significant at 5% level; *significant at 10% level.
106 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107
meter estimates of the marital status, and the birth cohort
dummy variables change after we correct for the possible
self-selection (see Table 3).
6. Conclusion
The estimation results from the analysis above ques-
tion the belief that vocational education has been overva-
lued and that providing general education to the work-
force followed by on-the-job training would be more
beneficial. After correcting for the possibility of self-
selection and other factors such as experience, marital
and migration status, the paper finds that, in Thailand,
upper secondary vocational education gives statistically
higher returns than general education at the same level.
Such results imply vocational education underinvestment
in Thailand. Furthermore, the findings from the probit
estimation that an individual from a well-to-do family is
more likely to undertake vocational education suggest
inadequate access. More investment to improve the
access to vocational education could thus prove ben-
eficial. Further research into the issue, once a more com-
plete set of data become available, should also provide
more insights.
Acknowledgements
The paper was written while the authors were at the
University of Melbourne, Australia. The authors wish to
thank Dr Robert Dixon, Dr Lisa Cameron, Dr Lata
Ganghadaran, and Quy Tran for their helpful comments,
suggestions, and assistance. Any error in this paper, how-
ever, is not theirs.
Appendix A. Sensitivity analysis determining
whether we can make inferences about the general
population
As mentioned in the analysis above, our sample
exclusion means caution is required when making infer-
ences to the general population. Although, as mentioned
in Section 2, there are theoretical reasons to believe that
our results with respect to the relative returns to
vocational education are at least partly applicable to the
general population, for completeness a sensitivity analy-
sis needs done to ascertain such applicability.
For our sensitivity analysis, the restricted and unre-
stricted earnings models are estimated on the general
population sample. The explanatory powers of the corre-
sponding restricted and unrestricted models are then
compared. In our case, a restricted model (see Eq. (A1))
has an identical econometric specification to that of the
simple Mincer’s earnings model (the ‘naı̈ve OLS’ model
presented in Section 3). The unrestricted model (see Eq.
(A2)), on the other hand, has an intercept dummy vari-
able for the sons or daughters of household heads as well
as its interactive terms with the other explanatory vari-
ables included in addition.
ln wi⫽bXi⫹ei. (A1)
ln wi⫽bXi⫹ddi⫹g(di∗Xi)⫹ei (A2)
where ln wi is log hourly earnings, Xi is a vector of per-
sonal characteristics of the individual i, di is a dummy
variable indicating whether the individual reported being
a son, or a daughter of the household head (di=1) or not
(di=0), b, d, and g are the vector of parameters pertaining
to the vectors of explanatory variables to be estimated.
To check whether the sons and daughters of household
heads have different earnings structures from those of
the general population, we check if the dummy variable
di and its interactive terms are statistically significant as
a group. If they are, the sample of the sons and daughters
of the household heads used in the analytical chapters
above has earnings structures that are statistically differ-
ent from those of the general population. To check the
significance of the dummy variable di and its interactive
terms, an F-test could be performed to test the follow-
ing restriction:
d⫽g⫽0. (A3)
The sensitivity analysis results suggest that our sample of
the sons and daughters of household heads have earnings
structures that are statistically different from those of the
general population. For both men and women, the F-
statistics are larger than the critical value Fcrit.6 Any
inference of the results from the earnings models above
to the general population thus needs to be done cau-
tiously.
In any case, although the sensitivity analysis results
are not ‘satisfactory’, the paper’s conclusions with
respect to the relative returns between upper secondary
vocational and upper secondary general education cannot
be completely disregarded. The results of our analysis
indeed may remain applicable to the general population
for two reasons.
First, for both men and women, the parameter esti-
mates of the vocational education dummy variables are
found to be positive and significant in both restricted and
unrestricted models.7 For men, the estimate of the returns
to education in the restricted model in our sensitivity
analysis is extremely close to that found in the ‘naı̈ve’
OLS estimation of the earnings model of Section 3
above. (See Table 3 for the ‘naı̈ve’ OLS estimate.)
6
Fcrit=苲1.976, Male’s F-stat=2.65, Females; F-stat=3.046.
7
Please contact the authors for the complete results.
 T. Moenjak, C. Worswick / Economics of Education Review 22 (2003) 99–107
Second, for the unrestricted model, for men, the coef-
ficient estimate of the interactive dummy variable indi-
cating if an observation is that of a household head’s
child with upper secondary vocational education is stat-
istically insignificant. This statistical insignificance
means that the relative returns between upper secondary
vocational and upper secondary general education for a
child of the household head are not statistically different
from those for the general population. In the case of
women, the coefficient estimate of the aforementioned
interactive dummy variable is statistically significant, but
with a negative sign. This means the returns to
vocational education for the household head’s daughters
understate the returns to vocational education for the
general women population.
With the two reasons cited above, it is arguable that
the paper’s conclusion with respect to the relative returns
to vocational education remains applicable to the general
population. Until a more complete set of data becomes
available for further research, however, the inference of
the coefficient estimates of the from the self-selection
corrected earnings models of this paper needs to be
done cautiously.
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