The Wage Labor Market and Inequality in Vietnam in the 1990s
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World Bank, Washington, DC
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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.
Palabras clave
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 GROWTH, ECONOMIC TRANSFORMATION, EMPLOYMENT, FARMS, FINANCIAL INSTITUTIONS, GINI COEFFICIENT, GROUP INEQUALITY, GROWTH RATES, HIGH INEQUALITY, HOUSEHOLD CONSUMPTION, HOUSEHOLD INCOME, HOUSEHOLD MEMBERS, INCOME, INCOME DATA, INCOME DISTRIBUTION, INCOME GROWTH, 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