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After the Reforms: Determinants of Wage Growth and Change in Wage Inequality in Vietnam - 1998 -2008

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  • FANG Zheng

    (Division of Economics, Nanyang Technological University, Singapore, 639798)

  • Chris SAKELLARIOU

    (Division of Economics, Nanyang Technological University, Singapore, 639798)

Abstract

The Vietnam “renovation” reforms were implemented during the 1990s, but their full effect was only felt several years later. We present evidence on the developments in real wage growth and inequality in Vietnam from 1998 to 2008. Wage growth was underpinned by changes in the wage structure (mainly associated with experience group) and residual changes. Growth in productive characteristics (mainly education) contributed to wage growth only at higher points of the wage distribution. Conventional measures of inequality as well as a decomposition of the Gini coefficient show that wage inequality decreased sharply through the 1990s until 2006, but levelled-off subsequently. The main contributors to changing inequality were again education (through the composition effect) and over-time changes in the return to experience. The paper also discusses the possible effects of minimum wage policies on wage inequality in Vietnam.

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File URL: http://www3.ntu.edu.sg/hss2/egc/wp/2010/2010-06(revised17Jan11).pdf
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Bibliographic Info

Paper provided by Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre in its series Economic Growth centre Working Paper Series with number 1006.

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Length: 32 pages
Date of creation: Jun 2010
Date of revision:
Handle: RePEc:nan:wpaper:1006

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Keywords: Wage inequality; unconditional quantile regression; Asia; Vietnam;

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  1. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
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Cited by:
  1. Phan, Diep & Coxhead, Ian, 2013. "Long-run costs of piecemeal reform: Wage inequality and returns to education in Vietnam," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1106-1122.

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