Publication:
The Wage Labor Market and Inequality in Vietnam in the 1990s

Loading...
Thumbnail Image
Files in English
English PDF (2.06 MB)
466 downloads
English Text (93.6 KB)
46 downloads
Date
2002-09
ISSN
Published
2002-09
Editor(s)
Abstract
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.
Link to Data Set
Citation
Gallup, John Luke. 2002. The Wage Labor Market and Inequality in Vietnam in the 1990s. Policy Research Working Paper;No. 2896. © http://hdl.handle.net/10986/19272 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Report Series
Other publications in this report series
  • Publication
    The Macroeconomic Implications of Climate Change Impacts and Adaptation Options
    (Washington, DC: World Bank, 2025-05-29) Abalo, Kodzovi; Boehlert, Brent; Bui, Thanh; Burns, Andrew; Castillo, Diego; Chewpreecha, Unnada; Haider, Alexander; Hallegatte, Stephane; Jooste, Charl; McIsaac, Florent; Ruberl, Heather; Smet, Kim; Strzepek, Ken
    Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.
  • Publication
    Global Poverty Revisited Using 2021 PPPs and New Data on Consumption
    (Washington, DC: World Bank, 2025-06-05) Foster, Elizabeth; Jolliffe, Dean Mitchell; Ibarra, Gabriel Lara; Lakner, Christoph; Tettah-Baah, Samuel
    Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.
  • Publication
    Geopolitical Fragmentation and Friendshoring
    (Washington, DC: World Bank, 2025-06-26) Grover, Arti; Vézina, Pierre-Louis
    This paper examines the relationship between geopolitical fragmentation and friendshoring of foreign investments over time, countries, and sectors. The analysis uses comprehensive data on foreign direct investments covering greenfield projects, mergers and acquisitions, and stocks of affiliates, as well as data on four alternative measures of geopolitical distance between countries. The gravity estimations suggest that, first, geopolitical differences have a negative effect on foreign investments and the magnitude has heightened in the post-pandemic period compared to a decade ago. Second, it is primarily the companies from advanced Western economies whose foreign investment decisions are increasingly shaped by friendshoring forces. Finally, the paper shows that friendshoring is not only confined to strategic industries, implying that allocations of foreign direct investments may not solely reflect national security or resilience considerations.
  • Publication
    Soaring Food Prices Threaten Recent Economic Gains in the EU
    (Washington, DC: World Bank, 2025-07-02) Robayo, Monica; Lucchetti, Leonardo Ramiro; Delgado-Prieto, Lukas; Badiani-Magnusson, Reena
    The surge in food prices following the 2021 economic rebound has become a significant concern for households, particularly low-income ones, in Bulgaria, Croatia, Poland, and Romania. Food price inflation, which surpasses general inflation rates, risks worsening poverty and food insecurity in these countries. This paper explores the distributional impacts of rising food prices and the effectiveness of government response measures. Low-income households, who allocate a larger share of their income to food, are disproportionately affected and are struggling to cope with unexpected expenses, leading to increased difficulties in accessing proper nutrition. Simulations indicate that rising food prices contribute to higher poverty rates and greater income inequality, especially among vulnerable populations. They also suggest that the main poverty-targeted social assistance schemes offer critical support for the extreme poor, but expanding both coverage and benefits is vital to shield all at-risk individuals. Targeted policies that balance immediate relief with long-term resilience-building are essential to addressing the challenges posed by escalating food prices.
  • Publication
    Disentangling the Key Economic Channels through Which Infrastructure Affects Jobs
    (Washington, DC: World Bank, 2025-04-03) Vagliasindi, Maria; Gorgulu, Nisan
    This paper takes stock of the literature on infrastructure and jobs published since the early 2000s, using a conceptual framework to identify the key channels through which different types of infrastructure impact jobs. Where relevant, it highlights the different approaches and findings in the cases of energy, digital, and transport infrastructure. Overall, the literature review provides strong evidence of infrastructure’s positive impact on employment, particularly for women. In the case of electricity, this impact arises from freeing time that would otherwise be spent on household tasks. Similarly, digital infrastructure, particularly mobile phone coverage, has demonstrated positive labor market effects, often driven by private sector investments rather than large public expenditures, which are typically required for other large-scale infrastructure projects. The evidence on structural transformation is also positive, with some notable exceptions, such as studies that find no significant impact on structural transformation in rural India in the cases of electricity and roads. Even with better market connections, remote areas may continue to lack economic opportunities, due to the absence of agglomeration economies and complementary inputs such as human capital. Accordingly, reducing transport costs alone may not be sufficient to drive economic transformation in rural areas. The spatial dimension of transformation is particularly relevant for transport, both internationally—by enhancing trade integration—and within countries, where economic development tends to drive firms and jobs toward urban centers, benefitting from economies scale and network effects. Turning to organizational transformation, evidence on skill bias in developing countries is more mixed than in developed countries and may vary considerably by context. Further research, especially on the possible reasons explaining the differences between developed and developing economies, is needed.
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    The Distribution of Consumption Expenditure in Sub-Saharan Africa
    (World Bank, Washington, DC, 2016-02) Jirasavetakul, La-Bhus Fah; Lakner, Christoph
    This paper uses a set of national household surveys to study the regional Sub-Saharan Africa distribution of consumption expenditure among individuals during 1993 to 2008. The analysis puts the disparities in living standards that exist among persons in Africa into context with the disparities that exist within and between African countries. Regional interpersonal inequality has increased (from a Gini index of 52 percent in 1993 to 56 percent in 2008), driven by increasing disparities in living standards across countries, while there has been no systematic increase in within-country inequality. For the African distribution as a whole, growth of consumption expenditure (from household surveys) has been low (around 1 percent per year). This growth has been uneven and as a result the richest 5 percent of Africans received around 40 percent of the total gains, while the bottom third stagnated.
  • Publication
    Linking Representative Household Models with Household Surveys for Poverty Analysis: A Comparison of Alternative Methodologies
    (World Bank, Washington, D.C., 2004-06) Agénor, Pierre-Richard; Chen, Derek H.C.; Grimm, Michael
    The authors compare three approaches to linking representative-household macro models with micro household income data in terms of their implications for measuring the poverty and distributional effects of policy shocks. These approaches are a simple micro-accounting method, an extension of that method to account for changes in employment structure, and the Beta distribution approach. Even though in the authors simulation exercises the three methods do not lead to fundamentally different results in absolute terms, they show that potential differences in the measurement of distributional and poverty effects of policy shocks can be very large.
  • Publication
    A Counterfactual Analysis of the Poverty Impact of Economic Growth in Cameroon
    (2010-03-01) Bassole, Leandre; Essama-Nssah, B.
    The Government of Cameroon has declared poverty reduction through strong and sustainable economic growth the central objective of its socioeconomic policy. This paper uses available household survey data to assess the performance of the economy with respect to this objective over the period 1996-2007. The authors use counterfactual decompositions based on both the Shapley method and the generalized Oaxaca-Blinder framework to identify proximate factors that might explain differences in observed outcomes over time, across regions and households. The concept of pro-poorness provides a basis for a normative evaluation of these outcomes. The analysis of changes in the size distribution of economic welfare reveals that formal sector employment, access to credit, education, and urban residence are characteristics that bring significantly high returns to households. Employment in smallholder agriculture has a negative impact on welfare across quantiles. Economic growth was accompanied by significant poverty reduction between 1996 and 2001. But poverty barely decreased between 2001 and 2007 due to very weak growth. Over the same period, household investment in human capital took a serious hit. Given the additional finding that the pattern of growth is characterized by urban bias and regional disparity, the overall assessment is that economic growth has been weakly pro-poor in Cameroon. There is therefore a need to re-examine and possibly reform the mechanisms governing the allocation of public resources designed to support individuals' efforts to improve their standard of living.
  • Publication
    Non-Farm Diversification, Poverty, Economic Mobility and Income Inequality : A Case Study in Village India
    (World Bank, Washington, DC, 2013-05) Himanshu; Lanjouw, Peter; Murgai, Rinku; Stern, Nicholas
    This paper assembles data at the all-India level and for the village of Palanpur, Uttar Pradesh, to document the growing importance, and influence, of the non-farm sector in the rural economy between the early 1980s and late 2000s. The suggestion from the combined National Sample Survey and Palanpur data is of a slow process of non-farm diversification, whose distributional incidence, on the margin, is increasingly pro-poor. The village-level analysis documents that the non-farm sector is not only increasing incomes and reducing poverty, but appears as well to be breaking down long-standing barriers to mobility among the poorest segments of rural society. Efforts by the government of India to accelerate the process of diversification could thus yield significant returns in terms of declining poverty and increased income mobility. The evidence from Palanpur also shows, however, that at the village-level a significant increase in income inequality has accompanied diversification away from the farm. A growing literature argues that such a rise in inequality could affect the fabric of village society, the way in which village institutions function and evolve, and the scope for collective action at the village level. Failure to keep such inequalities in check could thus undermine the pro-poor impacts from the process of structural transformation currently underway in rural India.
  • Publication
    Economic Inequality in the Arab Region
    (World Bank, Washington, DC, 2014-06) Hassine, Nadia Belhaj
    The paper uses harmonized household survey micro-data to assess the levels and determinants of economic inequality in 12 Arab countries. It focuses on the sources of rural-urban, as well as metropolitan-nonmetropolitan, inequalities and applies the unconditional quantile regression decomposition technique to analyze the welfare gaps across the entire distribution. The analysis finds moderate inequality levels, with the Gini coefficient for the distribution of household real per capita total expenditures ranging between 30.7 in Libya and 45 in Mauritania. Differences in households' endowments, such as demographic composition, human capital, and community characteristics, appear as the main sources of the urban-rural welfare gap. There is inequality between metropolitan and non-metropolitan regions in many countries, mainly because of differences in returns to households' characteristics and particularly returns to human capital.

Users also downloaded

Showing related downloaded files

  • Publication
    Poverty and Shared Prosperity 2022
    (Washington, DC : World Bank, 2022) World Bank
    Poverty and Shared Prosperity 2022: Correcting Course provides the first comprehensive analysis of the pandemic’s toll on poverty in developing countries. It identifies how governments can optimize fiscal policy to help correct course. Fiscal policies offset the impact of COVID-19 on poverty in many high-income countries, but those policies offset barely one quarter of the pandemic’s impact in low-income countries and lower-middle-income countries. Improving support to households as crises continue will require reorienting protective spending away from generally regressive and inefficient subsidies and toward a direct transfer support system—a first key priority. Reorienting fiscal spending toward supporting growth is a second key priority identified by the report. Some of the highest-value public spending often pays out decades later. Amid crises, it is difficult to protect such investments, but it is essential to do so. Finally, it is not enough just to spend wisely - when additional revenue does need to be mobilized, it must be done in a way that minimizes reductions in poor people’s incomes. The report highlights how exploring underused forms of progressive taxation and increasing the efficiency of tax collection can help in this regard. Poverty and Shared Prosperity is a biennial series that reports on global trends in poverty and shared prosperity. Each report also explores a central challenge to poverty reduction and boosting shared prosperity, assessing what works well and what does not in different settings. By bringing together the latest evidence, this corporate flagship report provides a foundation for informed advocacy around ending extreme poverty and improving the lives of the poorest in every country in the world. For more information, please visit worldbank.org/poverty-and-shared-prosperity.
  • Publication
    World Development Report 2017
    (Washington, DC: World Bank, 2017-01-30) World Bank Group
    Why are carefully designed, sensible policies too often not adopted or implemented? When they are, why do they often fail to generate development outcomes such as security, growth, and equity? And why do some bad policies endure? This book addresses these fundamental questions, which are at the heart of development. Policy making and policy implementation do not occur in a vacuum. Rather, they take place in complex political and social settings, in which individuals and groups with unequal power interact within changing rules as they pursue conflicting interests. The process of these interactions is what this Report calls governance, and the space in which these interactions take place, the policy arena. The capacity of actors to commit and their willingness to cooperate and coordinate to achieve socially desirable goals are what matter for effectiveness. However, who bargains, who is excluded, and what barriers block entry to the policy arena determine the selection and implementation of policies and, consequently, their impact on development outcomes. Exclusion, capture, and clientelism are manifestations of power asymmetries that lead to failures to achieve security, growth, and equity. The distribution of power in society is partly determined by history. Yet, there is room for positive change. This Report reveals that governance can mitigate, even overcome, power asymmetries to bring about more effective policy interventions that achieve sustainable improvements in security, growth, and equity. This happens by shifting the incentives of those with power, reshaping their preferences in favor of good outcomes, and taking into account the interests of previously excluded participants. These changes can come about through bargains among elites and greater citizen engagement, as well as by international actors supporting rules that strengthen coalitions for reform.
  • Publication
    World Development Report 2022
    (Washington, DC: World Bank, 2022-02-15) World Bank
    World Development Report 2022: Finance for an Equitable Recovery examines the central role of finance in the economic recovery from COVID-19. Based on an in-depth look at the consequences of the crisis most likely to affect low- and middle-income economies, it advocates a set of policies and measures to mitigate the interconnected economic risks stemming from the pandemic—risks that may become more acute as stimulus measures are withdrawn at both the domestic and global levels. Those policies include the efficient and transparent management of nonperforming loans to mitigate threats to financial stability, insolvency reforms to allow for the orderly reduction of unsustainable debts, innovations in risk management and lending models to ensure continued access to credit for households and businesses, and improvements in sovereign debt management to preserve the ability of governments to support an equitable recovery.
  • Publication
    World Bank East Asia and Pacific Economic Update, October 2020
    (Washington, DC: World Bank, 2020-09-28) World Bank
    COVID-19 has delivered a triple shock to the developing East Asia and Pacific (EAP) region: the pandemic itself, the economic impact of containment measures, and reverberations from the global recession. Without action on multiple fronts, the pandemic could reduce regional growth over the next decade by 1 percentage point per year, with the greatest impacts being felt by poor households, because of lower levels of access to healthcare, education, jobs, and finance. Why were many economies in the region able to contain the disease while some others still struggle? How have these shocks affected economic activity and poverty in different countries? What are the prospects for recovery and how will longer term growth be affected across the region? Is there a tension between containing the disease and providing relief today and promoting recovery and growth tomorrow? These key questions are addressed in the World Bank’s October 2020 EAP Economic Update.
  • Publication
    World Development Report 2018
    (Washington, DC: World Bank, 2018) World Bank
    Every year, the World Bank's World Development Report takes on a topic of central importance to global development. The 2018 Report, Learning to Realize Education's Promise, is the first ever devoted entirely to education. Now is an excellent time for it: education has long been critical for human welfare, but is even more so in a time of rapid economic change. The Report explores four main themes. First, education's promise: Education is a powerful instrument for eradicating poverty and promoting shared prosperity, but fulfilling its potential requires better policies - both within and outside the education system. Second, the learning crisis: Despite gains in education access, recent learning assessments show that many young people around the world, especially from poor families, are leaving school unequipped with even the most foundational skills they need for life. At the same time, internationally comparable learning assessments show that skills in many middle-income countries lag far behind what those countries aspire to. Third, promising interventions to improve learning: Research from areas such as brain science, pedagogical innovations, or school management have identified interventions that promote learning by ensuring that learners are prepared, that teachers are skilled as well as motivated, and that other inputs support the teacher-learner relationship. Fourth, learning at scale: Achieving learning throughout an education system will require more than just scaling up effective interventions. Change requires overcoming technical and political barriers by deploying salient metrics for mobilizing actors and tracking progress, building coalitions for learning, and being adaptive when implementing programs.