Decomposing the labor market earnings inequality: the public and private sectors in Vietnam, 1993-2006
AbstractIn contrast with the typical transition to a market economy, earnings inequality in Vietnam between 1993 and 2006 appears to have decreased, and the earnings gap in favor of public employees appears to have widened. The paper uses a comparative advantage model to disentangle the effect of sorting workers across sectors from the effect of the differences in returns to workers'skills. The selection of the best workers into the public sector is clearly an important component of the explanation for the public-private sector earnings gap, but the widening of this gap over time is primarily due to changes in the compensation patterns. The paper finds that, in the 1990s, public employees were underpaid compared with their earning potential in the private sector whereas, in the early 2000s, public employees earned similar returns to their comparative advantage in the public and private sectors. The increasing homogeneity in returns to skills in the Vietnamese labor market appears to explain both the increase in the public-private pay gap and the decrease in overall inequality.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 6344.
Date of creation: 01 Jan 2013
Date of revision:
Labor Markets; Public Sector Economics; Public Sector Management and Reform; Inequality; Government Procurement;
Other versions of this item:
- Clément Imbert, 2013. "Decomposing the Labor Market Earnings Inequality: The Public and Private Sectors in Vietnam, 1993–2006," World Bank Economic Review, World Bank Group, vol. 27(1), pages 55-79.
- NEP-ALL-2013-02-03 (All new papers)
- NEP-LMA-2013-02-03 (Labor Markets - Supply, Demand, & Wages)
- NEP-TRA-2013-02-03 (Transition Economics)
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