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

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Author Info

  • Nguyen, Huu Chi

    ()
    (IRD, DIAL, Paris)

  • Nordman, Christophe Jalil

    ()
    (IRD, DIAL, Paris)

  • Roubaud, François

    ()
    (IRD, DIAL, Paris)

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 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 the Vietnam's labour market specificity.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7149.

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Length: 47 pages
Date of creation: Jan 2013
Date of revision:
Publication status: published in: Journal of Development Studies, 2013, 49 (12), 1694-1710
Handle: RePEc:iza:izadps:dp7149

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Keywords: transition matrix; earnings gap; informal employment; panel data; Vietnam;

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References

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  1. Falco, Paolo & Kerr, Andrew & Rankin, Neil & Sandefur, Justin & Teal, Francis, 2011. "The returns to formality and informality in urban Africa," Labour Economics, Elsevier, vol. 18(S1), pages S23-S31.
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  14. 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.
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  16. Jean-Pierre Cling & Mireille Razafindrakoto & François Roubaud, 2012. "Explanatory factors behind formalizing non-farm household businesses in Vietnam," Working Papers DT/2012/20, DIAL (Développement, Institutions et Mondialisation).
  17. Bargain, Olivier & Kwenda, Prudence, 2010. "Is Informality Bad? Evidence from Brazil, Mexico and South Africa," IZA Discussion Papers 4711, Institute for the Study of Labor (IZA).
  18. Nordman, Christophe Jalil & Robilliard, Anne-Sophie & Roubaud, François, 2011. "Gender and Ethnic Earnings Gaps in Seven West African Cities," Economics Papers from University Paris Dauphine 123456789/4305, Paris Dauphine University.
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Citations

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Cited by:
  1. Philippe De Vreyer & François Roubaud, 2013. "Urban Labor Markets in Sub-Saharan Africa," World Bank Publications, The World Bank, number 15808, October.
  2. Christophe Nordman & Faly Rakotomanana & François Roubaud, 2012. "Informal versus Formal: A Panel Data Analysis of Earnings Gaps in Madagascar," Working Papers DT/2012/12, DIAL (Développement, Institutions et Mondialisation).
  3. Tansel, Aysit & Kan, Elif Oznur, 2012. "The formal/informal employment earnings gap: evidence from Turkey," MPRA Paper 38498, University Library of Munich, Germany.
  4. 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).

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