Exploring the impact of digital transformation and qualifications on wage disparities in urban and rural of Vietnam

Wages are one of the most important priorities for workers. Consequently, increasing income serves as a strong motivator for them to improve the factors that influence their earnings. This study analyzes data from the 2022 Vietnam Labor Force Survey (LFS), combining quantile regression and Oaxaca-Blinder wage gap decomposition to examine the impact of digital transformation and education on the wage disparities between urban and rural areas in Vietnam. The results indicate that education has a weaker effect on income at higher quantiles, particularly for workers with postgraduate qualifications. Conversely, the application of information technology in work provides a significant advantage, contributing to substantial income disparities between workers who utilize technology and those who do not, in both urban and rural areas. Furthermore, gender remains a significant factor in income disparities, with inequality being more pronounced in rural areas. Urban workers consistently earn higher wages than their rural counterparts across all quantiles, primarily due to better infrastructure and easier access to resources in urban regions. The study underscores the importance of enhancing skills, especially digital skills, and recommends improving resource and technology accessibility in rural areas to reduce the income gap between the two regions.