Long-run costs of piecemeal reform: wage inequality and returns to education in Vietnam

Diep Phan and Ian Coxhead

No 124207, 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington from Agricultural and Applied Economics Association

Abstract: “Shock therapy” transitions in Eastern Europe facilitated movement of skilled workers into privatized industries offering high wage premia relative to state industries. Other transitional economies (notably China and Vietnam) have been slower to relinquish control over key industries and factor markets. Some costs of this piecemeal approach are now becoming apparent. We examine the spillover of continuing capital market distortions into the market for a complementary factor, skilled labor. Using Vietnamese data we find that capital market segmentation creates a two-track market for skills, in which state sector workers earn high salaries while non-state workers face lower demand and lower compensation. Growth is reduced directly by diminished allocative efficiency and incentives to acquire education, and indirectly by higher wage inequality and rents for workers with access to state jobs.

Keywords: International Development; Labor and Human Capital (search for similar items in EconPapers)
Pages: 44
Date: 2012
New Economics Papers: this item is included in nep-dev, nep-lab, nep-lma and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/124207/files/Phan-Coxhead-AAEA.pdf (application/pdf)

Related works:
Journal Article: Long-run costs of piecemeal reform: Wage inequality and returns to education in Vietnam (2013)
Working Paper: Long-Run Costs of Piecemeal Reform: Wage Inequality and Returns to Education in Vietnam (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea12:124207

DOI: 10.22004/ag.econ.124207

Access Statistics for this paper

More papers in 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().