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

  • Huu Chi Nguyen
  • Christophe J. Nordman
  • François Roubaud

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 rich 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 Vietnam's labour market specificity.

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Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 49 (2013)
Issue (Month): 12 (December)
Pages: 1694-1710

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Handle: RePEc:taf:jdevst:v:49:y:2013:i:12:p:1694-1710
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  1. Bocquier, Philippe & Nordman, Christophe Jalil & Vescovo, Aude, 2010. "Employment Vulnerability and Earnings in Urban West Africa," Economics Papers from University Paris Dauphine 123456789/4294, Paris Dauphine University.
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  16. Christophe J. Nordman & François-Charles Wolff, 2009. "Gender differences in pay in African manufacturing firms," Working Papers hal-00421227, HAL.
  17. 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).
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