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

  • Roubaud, François
  • Nordman, Christophe Jalil
  • Nguyen, Huu Chi

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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Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/12321.

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Date of creation: Dec 2013
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Publication status: Published in The Journal of Development Studies, 2013, Vol. 49, no. 12. pp. 1694-1710.Length: 16 pages
Handle: RePEc:dau:papers:123456789/12321
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  1. repec:dau:papers:123456789/10658 is not listed on IDEAS
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  6. 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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  9. Gong, Xiaodong & Van Soest, Arthur & Villagomez, Elizabeth, 2004. "Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 53(1), pages 1-36, October.
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