2016•Research at the University of Copenhagen (University of Copenhagen)Requires access
The impact of minimum wage adjustments on Vietnamese wage inequality
Henrik Hansen, John Rand, Nina Torm
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Abstract
Using Vietnamese Labour Force Survey data, we analyse the impact of minimum wage changes on wage inequality. Minimum wages serve to reduce local wage inequality in the formal sectors by decreasing the gap between the median wages and the lower tail of the local wage distributions. In contrast, local wage inequality is increased in the informal sectors. Overall, the minimum wages decrease national wage inequality. Our estimates indicate a decrease in the wage distribution Gini coefficient of about 2 percentage points and an increase in the 10/50 wage ratio of 5-7 percentage points caused by the adjustment of the minimum wages from 2011 to 2012 that levelled the minimum wage across economic sectors.