Employment Structure and Returns to Skill in Vietnam

Abstract

This paper uses Labor Force Survey data to assess key aspects of the labor market in Vietnam over 2007-14. The analysis finds large growth in wage employment in the foreign-owned and domestic private sectors. However, the state sector remains a major employer, particularly for workers with higher education, employing 70 percent of wage workers with a university degree. Low-skilled occupations dominate the stock of existing jobs, but the top growing occupations overwhelmingly belong to high-skilled categories. The paper notes that the high unemployment rates of recent university graduates, which have raised concern about a mismatch between skills and employer needs, reflect the transition to the job market and diminish sharply as graduates age. The returns to education in the private sector are highest for university graduates. Finally, women and ethnic minorities are less likely to work in wage jobs, and those that do earn lower wages, although the wage gap for women has declined over time.