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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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File URL: http://hdl.handle.net/10.1080/00220388.2013.822069
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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. Philippe Bocquier & Christophe Nordman & Aude Vescovo, 2010. "Employment Vulnerability and Earnings in Urban West Africa," Working Papers DT/2010/05, DIAL (Développement, Institutions et Mondialisation).
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  7. Roubaud, François & Razafindrakoto, Mireille & Cling, Jean-Pierre, 2012. "Explanatory factors behind formalizing non-farm household businesses in Vietnam," Economics Papers from University Paris Dauphine 123456789/11191, Paris Dauphine University.
  8. McKenzie, David & Sakho, Yaye Seynabou, 2007. "Does it pay firms to register for taxes ? the impact of formality on firm profitability," Policy Research Working Paper Series 4449, The World Bank.
  9. Nordman, Christophe J. & Robilliard, Anne-Sophie & Roubaud, François, 2011. "Gender and ethnic earnings gaps in seven West African cities," Labour Economics, Elsevier, vol. 18(S1), pages S132-S145.
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  11. Jean-Pierre Cling & Mohamed Ali Marouani & Mireille Razafindrakoto & Anne-Sophie Robilliard & Francois Roubaud, 2009. "The Distributive Impact of Vietnam's Accession to the WTO," Economie Internationale, CEPII research center, issue 118, pages 43-71.
  12. Matteo Migheli, 2011. "Do the Vietnamese Support the Economic Doi Moi ?," Journal of Development Studies, Taylor & Francis Journals, vol. 48(7), pages 939-968, September.
  13. Bocquier, Philippe & Nordman, Christophe J. & Vescovo, Aude, 2010. "Employment Vulnerability and Earnings in Urban West Africa," World Development, Elsevier, vol. 38(9), pages 1297-1314, September.
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  16. Jean-Pierre Cling & Mireille Razafindrakoto & Francois Roubaud, 2010. "Assessing the Potential Impact of the Global Crisis on the Labour Market and the Informal Sector in Vietnam," Working Papers 05, Development and Policies Research Center (DEPOCEN), Vietnam.
  17. Wolff, François-Charles & Nordman, Christophe Jalil, 2010. "Gender Differences in Pay in African Manufacturing Firms," Economics Papers from University Paris Dauphine 123456789/10806, Paris Dauphine University.
  18. Fernández, Rosa M. & Nordman, Christophe J., 2009. "Are there pecuniary compensations for working conditions?," Labour Economics, Elsevier, vol. 16(2), pages 194-207, April.
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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. Nordman, Christophe Jalil & Rakotomanana, Faly & Roubaud, François, 2012. "Informal versus Formal: A Panel Data Analysis of Earnings Gaps in Madagascar," Economics Papers from University Paris Dauphine 123456789/10601, Paris Dauphine University.
  3. Mireille Razafindrakoto & François Roubaud & Jean-Michel Wachsberger, 2012. "Santé, Inégalités et ruptures sociales à Antananarivo, Premiers résultats de l’enquête SIRS 2003," Working Papers DT/2012/10, DIAL (Développement, Institutions et Mondialisation).
  4. Philippe De Vreyer & François Roubaud, 2013. "Urban Labor Markets in Sub-Saharan Africa," World Bank Publications, The World Bank, number 15808, October.

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