Using Vietnamese living standard survey in 2002, 2004 and 2006, this paper investigates
the contribution of investment in education on agricultural households’ income in Vietnam.
The study reveals that in the context of agricultural development in Vietnam, years of
schooling has affected significantly to income of farmers. Employing the method
introduced by Hausman and Taylor in 1981, this paper finds that the effect of years of
schooling on farmers’ income is considerably. The more one year of schooling increases
approximately 25% percent of income where individual – specific unobservable effects is
controlled. Based on empirical result, policy implications are built up in order to enhance
the effect of investment on education to income of agricultural households.