This paper explores how the expansion of labor-intensive
manufacturing exports resulting from the United States–
Vietnam Bilateral Trade Agreement in 2001 translated
into wages of skilled and unskilled workers and the
skill premium in Vietnam through the channel of labor
demand. In order to isolate the impacts of trade shock
from the effects of other market-oriented reforms, a
strategy of exploiting the regional variation in difference
in exposure to trade is employed. Using the data on
panel individuals from the Vietnam Household Living
Standards Surveys of 2002 and 2004, and addressing the issue of endogeneity, the results confirm the existence of
a Stolper-Samuelson type effect. That is, those provinces
more exposed to the increase in exports experienced
relatively larger wage growth for unskilled workers and a
decline of (or a smaller increase in) the relative wages of
skilled and unskilled workers. During the period 2000–
2004, the skill premium increased for Vietnam’s economy
as a whole in the sample of panel individuals. Thus, the
Stolper-Samuelson type effect appears to have mitigated
but did not outweigh the impacts of other factors that
contributed to the rise in the skill premium.