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

  • Huu Chi Nguyen

    ()

    (Centre of Economics, University Paris Nord (CEPN), DIAL, IRD, Paris)

  • Christophe Nordman

    ()

    (UMR DIAL- IRD Université Paris-Dauphine)

  • François Roubaud

    ()

    (UMR DIAL- IRD Université Paris-Dauphine)

(english) 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 the Vietnam’s labour market specificity. _________________________________ (français) En dépit d'un poids économique massif dans les pays en développement, on sait peu de choses sur la structure des revenus du secteur informel, notamment en comparaison du secteur formel. En tirant avantage de l'enquête VHLSS au Vietnam, et en particulier des trois vagues de données de panel (2002, 2004, 2006), nous examinons l'ampleur du différentiel de rémunération formel/informel en tenant compte de l'hétérogénéité à trois niveaux différents : celle des travailleurs, de leurs emplois (salariés vs non salariés) et de la distribution des revenus. Nous estimons des modèles à effets fixes (standards et régressions quantiles) permettant de contrôler les caractéristiques inobservables des individus. Nos résultats montrent que le différentiel de rémunération dépend fortement du statut dans l'emploi et de la position relative dans la distribution des revenus. Dans certains cas, le secteur informel apparaît plus rémunérateur. La comparaison avec les études réalisées dans d'autres PED permet de mettre en lumière les spécificités du marché du travail au Vietnam.

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Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2011/15.

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Length: 52 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:dia:wpaper:dt201115
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  1. Paolo Falco & Andrew Kerr & Neil Rankin & Justin Sandefur & Francis Teal, 2010. "The Returns to formality and Informality in Urban Africa," CSAE Working Paper Series 2010-03, Centre for the Study of African Economies, University of Oxford.
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  22. Rand, John & Torm, Nina, 2012. "The Benefits of Formalization: Evidence from Vietnamese Manufacturing SMEs," World Development, Elsevier, vol. 40(5), pages 983-998.
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