Ethnic wage inequality in Vietnam

This paper seeks to complement earlier studies on ethnic minority underdevelopment in Vietnam by empirically examining the ethnic wage gap for the wage employed in the Vietnamese labour market, using data from a large-scale household survey conducted in 2002. Design/methodology/approach The paper uses the index number decomposition method suggested by Oaxaca to decompose the ethnic wage gap into treatment and endowment effects at both the mean and selected quantiles of the conditional wage distribution. Findings The results confirm the existence of an ethnic wage gap in the labour market, though the gap is found to be substantially narrower than the ethnic gap detected using household living standard measures for Vietnam. Decomposition results reveal that the ethnic wage gap is largely attributable to differentials in the returns to endowments, a finding invariant whether the mean or selected quantiles of the conditional wage distribution are examined. Research limitations/implications In the absence of feasible alternatives, the paper uses an ad hoc procedure to correct for selectivity into wage employment for the quantile regression models. In addition, due to data constraints with regard to earnings, the paper does not examine the ethnic wage gap for the self-employed. Originality/value The paper is the first to analyse the ethnic wage gap in the Vietnam labour market and one of the few to examine ethnic pay differentials at selected points of the conditional wage distribution using quantile regression analysis.