This paper examines the changes in relative earnings of workers with different education levels in Vietnam. Using a simple demand-and-supply framework developed by Katz and Murphy (1992), it was found that an increase in the relative demand for better-educated male workers in particular appears to play an important role in explaining the earnings differentials between workers of different education groups. Education reform to better suit the needs of the post-reform emerging market, on-the-job training for workers and equal access to education are some policy options that hold the key to reducing wage inequality between different education groups. Copyright (c) 2006 The Author Journal compilation (c) 2006 The European Bank for Reconstruction and Development..