Convergence of public and private enterprise wages in a transition economy: Evidence from a distributional decomposition in Vietnam, 2002–2014

We examine the transition of state-owned enterprises (SOEs) in Vietnam from a wage perspective by decomposing the difference in wage distributions between SOE employees and non-SOE employees during the period 2002–2014. In 2002, SOE employees enjoyed higher pay than non-SOE employees owing to characteristics difference and any factors other than either the price of skills or the characteristics difference, so-called residuals difference. University graduates were the main contributor to the endowments difference. However, we found that SOE pay schemes converged with those of non-SOEs by 2014, in terms of both the price of skills and residuals.