The informal sector wage gap among Vietnamese micro-firms
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The informal sector wage gap among Vietnamese micro-firms. / Torm, Nina Elisabeth; Rand, John.
In: Journal of the Asia Pacific Economy, Vol. 17, No. 4, 11.2012, p. 560-577.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - The informal sector wage gap among Vietnamese micro-firms
AU - Torm, Nina Elisabeth
AU - Rand, John
N1 - JEL classification: J31, O17, O53
PY - 2012/11
Y1 - 2012/11
N2 - Based on unique firm survey data from 2009, this paper examines the wage differential between formal and informal manufacturing household enterprises in Vietnam. Using the Blinder–Oaxaca decomposition method, we investigate whether the wage gap is attributed mostly to differences in observable characteristics (the endowments) between formal and informal firms, or to variations in the returns to these characteristics (the unexplained component). The results show that average wages are 10%–20% higher in formal firms and that the majority of this gap is due to observable characteristics, in particular differences in firm size, workforce characteristics and location. Thus, traditional wage determinants seem to play an important role in explaining the higher wage returns in formal firms.
AB - Based on unique firm survey data from 2009, this paper examines the wage differential between formal and informal manufacturing household enterprises in Vietnam. Using the Blinder–Oaxaca decomposition method, we investigate whether the wage gap is attributed mostly to differences in observable characteristics (the endowments) between formal and informal firms, or to variations in the returns to these characteristics (the unexplained component). The results show that average wages are 10%–20% higher in formal firms and that the majority of this gap is due to observable characteristics, in particular differences in firm size, workforce characteristics and location. Thus, traditional wage determinants seem to play an important role in explaining the higher wage returns in formal firms.
KW - Faculty of Social Sciences
KW - informality
KW - wages
KW - Vietnam
KW - informality
KW - wages
KW - Vietnam
U2 - 10.1080/13547860.2012.724544
DO - 10.1080/13547860.2012.724544
M3 - Journal article
VL - 17
SP - 560
EP - 577
JO - Journal of the Asia Pacific Economy
JF - Journal of the Asia Pacific Economy
SN - 1354-7860
IS - 4
ER -
ID: 44784822