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Citation Information

Type Working Paper
Title Globalization, wages and wage premia in a transition economy: new evidence from Vietnam
Publication (Day/Month/Year) 2011
URL http://www.aae.wisc.edu/events/papers/DevEcon/2011/coxhead.09.22.pdf
We ask what has happened to wages and wage premia during Vietnam‘s globalization and transition from command to mixed economy. During the 1990s and 2000s, wages rose in real terms and the skill premium also increased. We find, however, that neither trend has been linear, or even monotonic, over the entire transition period. In particular, while average real wages increased between 1993 and 2008, most of this increase happened during the 1990s. Skill premia likewise rose during the 1990s but leveled off in the 2000s. In a small transitional economy like Vietnam, non-farm wages have been subject to significant influences both from increased exposure to global markets and from domestic policy reforms—notably the relaxation of state sector labor market regulations. We designate these two sets of changes as =treatments‘ imposed on an economy where, for historical and institutional reasons, state sector and private sector labor markets are substantively segmented. With this approach we are able, using a triple-difference estimator, to identify the contribution of each type of policy shift to changes in wages, and to changes in intersectoral wage premia, in different phases of the economic reform process.

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