The Wage Labor Market and Inequality in Vietnam in the 1990s

Has the expansion of wage employment in Vietnam exacerbated social inequalities, despite its contribution to income growth? Gallup uses the two rounds of the Vietnamese Living Standards Survey (VLSS) to evaluate the contribution of wage employment to inequality and income growth over the period of rapid economic growth in the 1990s following market reforms. If Vietnam sustains its economic development in the future, wage employment will become an ever more important source of household income as family farms and self-employed household enterprises become less prevalent. Observing the recent evolution of wage employment compared with farm and non-farm self-employment provides clues as to how economic development will change Vietnamese society, in particular its impact on income inequality within and between communities. The author shows that standard methods for calculating income inequality can be severely biased due to measurement error when decomposing the contribution of different sectors, regions, or groups to overall inequality. A new method for consistent decomposition of inequality by income source shows that despite the rapid growth of wages in the 1990s, wage inequality fell modestly. Contrary to the results of uncorrected methods, wage employment contributes a roughly similar amount to overall income inequality as other nonagricultural employment (household enterprise and remittances, mainly). Agricultural income actually reduces overall income inequality because inequality between agricultural households is much lower than inequality between nonagricultural households, and agricultural income has a lower correlation with other income sources. Wage employment has not been the locus of growing disparity between the haves and the have-nots in Vietnam. A declining share of agriculture as the economy grows in Vietnam means that income inequality will rise, assuming that within-sector inequality does not change. This rising inequality, due to the shrinking share of agriculture, will be difficult to avoid without giving up economic growth and rapid poverty reduction in Vietnam. Historically, the process of economic development has always brought about a transition out of small farms and household enterprises into wage employment as worker productivity increases and non-household enterprises dominate the economy.

Bibliographic Details

Main Author:	Gallup, John Luke
Language:	English en_US
Published:	World Bank, Washington, DC 2002-09
Subjects:	WAGE RATE, LABOR MARKET CHARACTERISTICS, WAGE DIFFERENTIATION, EMPLOYMENT, SOCIAL INEQUALITY, INCOME GROWTH, LIVING STANDARDS INDICATORS, ECONOMIC GROWTH, MARKET REFORMS, SECTORAL ASSESSMENT, AGRICULTURAL ACTIVITY, PRODUCTIVITY GROWTH AGRICULTURAL PRODUCTION, AVERAGE INCOME, AVERAGE LEVEL, AVERAGE RATE, BETWEEN-GROUP INEQUALITY, CONSUMPTION SMOOTHING, CROSS-COUNTRY INEQUALITY, DEBT, DECREASING RATE, DEVELOPING COUNTRIES, DURABLE GOODS, ECONOMIC DEVELOPMENT, ECONOMIC TRANSFORMATION, FARMS, FINANCIAL INSTITUTIONS, GINI COEFFICIENT, GROUP INEQUALITY, GROWTH RATES, HIGH INEQUALITY, HOUSEHOLD CONSUMPTION, HOUSEHOLD INCOME, HOUSEHOLD MEMBERS, INCOME, INCOME DATA, INCOME DISTRIBUTION, INCOME INEQUALITY, INCOME LEVEL, INCOME LEVELS, INCOME SOURCE, INCOME SOURCES, INCOMES, INEQUALITY, INEQUALITY INDEX, INEQUALITY MEASURE, INEQUALITY MEASURES, LABOR COSTS, LABOR FORCE, LABOR MARKET, LABOR MARKETS, LIVING STANDARDS, LOW INCOME, LOW INCOME COUNTRIES, MACROECONOMICS, MARKET ACTIVITIES, MEAN INCOME, MEASUREMENT ERROR, MEASUREMENT ERRORS, MEASURING INEQUALITY, MIDDLE CLASS, NATURAL LOGARITHM, NEGATIVE CORRELATION, NET INCOME, PER CAPITA GROWTH, POLICY RESEARCH, POOR, POOR HOUSEHOLDS, POSITIVE IMPACT, POVERTY REDUCTION, PRODUCTIVITY, RAPID GROWTH, REAL GNP, REAL WAGES, REDUCED POVERTY, REGIONAL DIFFERENCES, RELATIVE CONTRIBUTIONS, RISING INEQUALITY, SAVINGS, SECTORAL COMPOSITION, SOCIAL PROBLEMS, UNEMPLOYMENT, WAGE INEQUALITY, WAGE RATES, WELL-BEING,
Online Access:	http://documents.worldbank.org/curated/en/2002/09/2031706/wage-labor-market-inequality-viet-nam-1990s https://hdl.handle.net/10986/19272
Tags:	Add Tag No Tags, Be the first to tag this record!