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Trade liberalization and the wage–skill premium: Evidence from Vietnamese manufacturing

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  • Mita Bhattacharya
  • Kien Trung Nguyen

Abstract

This paper examines the wage–skill premium in Vietnamese manufacturing since the reform programme. The effects of tariff reductions on the wage–skill premium are analyzed in the presence of exporting opportunities, foreign investment, and research and development. The findings with firm‐level data reveal that a 10‐ percentage point fall in output tariffs is associated with a 4 percent increase in the wage–skill premium. The wage–skill premium in foreign‐invested enterprises is 40 percent higher than that of domestic enterprises. Trade liberalization influences the wage–skill premium in the presence of foreign ownership and R&D, while its impact on the skill premium only works through exporting.

Suggested Citation

  • Mita Bhattacharya & Kien Trung Nguyen, 2019. "Trade liberalization and the wage–skill premium: Evidence from Vietnamese manufacturing," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 27(2), pages 519-540, February.
    • Handle: RePEc:wly:ectrin:v:27:y:2019:i:2:p:519-540
    DOI: 10.1111/ecot.12183
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