Wage determination and distribution in urban China and Vietnam: A comparative analysis

Lixin Cai and Amy Liu

Journal of Comparative Economics, 2015, vol. 43, issue 1, 186-203

Abstract: Wages are higher in China than in Vietnam. Using data from the Chinese Household Income Project 2002 and the Vietnam Household Living Standards Survey 2002, this paper aims to understand the sources of the wage differences between the two countries. The decomposition results show that for men (women), differences in returns to observed wage determinants contribute more to the inter-country wage gap for most of the wage distribution (the part of the distribution beyond the 20th quantile). Differences in returns to industry are especially important contributor to the wage structure effect for males. For females, differences in the returns to education and experience are the important contributors to the wage structure effect at the middle of the wage distribution. At the low end of the female wage distribution, differences in the distribution of education and experience are the main factors. Despite the lower wages, the relatively lower skilled workforce and the less competitive industry, as a result of the less extensive ownership and trade reforms and slower pace of change in education policy, may erode Vietnam’s attractiveness.

Keywords: Wage determination; Wage distribution; Unconditional quantile regressions; Decomposition (search for similar items in EconPapers)
JEL-codes: J31 P52 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:43:y:2015:i:1:p:186-203

DOI: 10.1016/j.jce.2014.02.004

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