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Who Suffers the Penalty?: A Panel Data Analysis of Earnings Gaps in Vietnam

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  • Huu Chi Nguyen
  • Christophe J. Nordman
  • François Roubaud

Abstract

In spite of its predominant economic weight in developing countries, little is known about the informal sector earnings structure compared to that of the formal sector. Taking advantage of the rich VHLSS dataset in Vietnam, in particular its three wave panel data (2002, 2004, 2006), we assess the magnitude of various formal--informal earnings gaps while addressing heterogeneity at three different levels: the worker, the job (wage employment vs. self-employment) and the earnings distribution. We estimate fixed effects and quantile regressions to control for unobserved individual characteristics. Our results suggest that the informal sector earnings gap highly depends on the workers' job status and on their relative position in the earnings distribution. Penalties may in some cases turn into premiums. By comparing our results with studies in other developing countries, we draw conclusions highlighting Vietnam's labour market specificity.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 49 (2013)
Issue (Month): 12 (December)
Pages: 1694-1710

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Handle: RePEc:taf:jdevst:v:49:y:2013:i:12:p:1694-1710

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  1. Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
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  15. Philippe Bocquier & Christophe Nordman & Aude Vescovo, 2010. "Employment Vulnerability and Earnings in Urban West Africa," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2010/05, DIAL (Développement, Institutions et Mondialisation).
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Cited by:
  1. Tansel, Aysit & Kan, Elif Oznur, 2012. "The Formal/Informal Employment Earnings Gap: Evidence from Turkey," IZA Discussion Papers 6556, Institute for the Study of Labor (IZA).
  2. Mireille Razafindrakoto & François Roubaud & Jean-Michel Wachsberger, 2012. "Santé, Inégalités et ruptures sociales à Antananarivo, Premiers résultats de l’enquête SIRS 2003," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2012/10, DIAL (Développement, Institutions et Mondialisation).
  3. De Vreyer, Philippe & Roubaud, François, 2013. "Urban Labor Markets in Sub-Saharan Africa," Economics Papers from University Paris Dauphine 123456789/13410, Paris Dauphine University.
  4. Christophe Nordman & Faly Rakotomanana & François Roubaud, 2012. "Informal versus Formal: A Panel Data Analysis of Earnings Gaps in Madagascar," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2012/12, DIAL (Développement, Institutions et Mondialisation).

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