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Decomposing the Labor Market Earnings Inequality: The Public and Private Sectors in Vietnam, 1993-2006

Author

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  • Clément Imbert

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract
In 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. We use 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. We find 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.

Suggested Citation

  • Clément Imbert, 2013. "Decomposing the Labor Market Earnings Inequality: The Public and Private Sectors in Vietnam, 1993-2006," Post-Print hal-00813041, HAL.
    • Handle: RePEc:hal:journl:hal-00813041
    DOI: 10.1093/wber/lhs009
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    References listed on IDEAS

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    Cited by:

    1. Schmillen,Achim Daniel & Packard,Truman G., 2016. "Vietnam's labor market institutions, regulations, and interventions : helping people grasp work opportunities in a risky world," Policy Research Working Paper Series 7587, The World Bank.
    2. Thanh P. Bui & Katsushi S. Imai, 2019. "Determinants of Rural-Urban Inequality in Vietnam: Detailed Decomposition Analyses Based on Unconditional Quantile Regressions," Journal of Development Studies, Taylor & Francis Journals, vol. 55(12), pages 2610-2625, December.
    3. Falco, Paolo & Haywood, Luke, 2016. "Entrepreneurship versus joblessness: Explaining the rise in self-employment," Journal of Development Economics, Elsevier, vol. 118(C), pages 245-265.
    4. Vu, Tien Manh & Yamada, Hiroyuki, 2020. "Convergence of public and private enterprise wages in a transition economy: Evidence from a distributional decomposition in Vietnam, 2002–2014," Economic Systems, Elsevier, vol. 44(1).
    5. Bold, Tessa & Barton, Nicholas & Sandefur, Justin, 2017. "Measuring Rents from Public Employment: Regression discontinuity evidence from Kenya," CEPR Discussion Papers 12105, C.E.P.R. Discussion Papers.
    6. Nicholas Barton & Tessa Bold & Justin Sandefur, 2017. "Measuring Rents from Public Employment: Regression Discontinuity Evidence from Kenya - Working Paper 457," Working Papers 457, Center for Global Development.
    7. Ija Trapeznikova & Juan Pablo Rud, 2015. "Wage Dispersion, Job Creation and Development: Evidence from Sub-Saharan Africa," 2015 Meeting Papers 1005, Society for Economic Dynamics.
    8. Dang, Thang, 2015. "Intergenerational mobility of earnings and income among sons and daughters in Vietnam," MPRA Paper 75357, University Library of Munich, Germany.
    9. Cai, Lixin & Liu, Amy Y.C., 2015. "Wage determination and distribution in urban China and Vietnam: A comparative analysis," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 186-203.

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