Long-run costs of piecemeal reform: Wage inequality and returns to education in Vietnam
AbstractIn this paper, we examine changes in wage structure and wage premia during Vietnam’s transition from command to market economy. Relative to other work in this literature, our paper is unique in that we identify the policies that lead to such changes. By examining skill premium trends along the two dimensions of particular importance to the transition—state or non-state firms, and traded or non-traded industries—we are able to separate the contribution of external liberalization to wage growth and rising skill premia from that of domestic labor market reforms, and to examine potential interactions between the two types of reform. The results point to the high cost of incomplete reform in Vietnam. Capital market segmentation creates a two-track market for skills, in which state sector workers earn high salaries while non-state workers face lower demand and lower compensation. Growth is reduced directly by diminished allocative efficiency and reduced incentives to acquire education, and indirectly by higher wage inequality and rents for workers with access to state jobs.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Comparative Economics.
Volume (Year): 41 (2013)
Issue (Month): 4 ()
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Web page: http://www.elsevier.com/locate/inca/622864
Other versions of this item:
- Phan, Diep & Coxhead, Ian, 2012. "Long-Run Costs of Piecemeal Reform: Wage Inequality and Returns to Education in Vietnam," Staff Paper Series 566, University of Wisconsin, Agricultural and Applied Economics.
- Phan, Diep & Coxhead, Ian A., 2012. "Long-run costs of piecemeal reform: wage inequality and returns to education in Vietnam," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124207, Agricultural and Applied Economics Association.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
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