Ethnic Wage Inequality in Vietnam: Empirical Evidence from 2002

This paper complements earlier studies on ethnic minority underdevelopment in Vietnam by empirically examining the ethnic wage gap in the Vietnamese labour market, using data from a large-scale household survey conducted in 2002. The paper uses the ‘index number’ decomposition method suggested by Oaxaca (1973) to decompose the ethnic wage gap into treatment and endowment effects at both the mean and at selected quantiles of the conditional wage distribution. The results confirm the existence of an ethnic wage gap in the labour market, through this gap is found to be substantially narrower than the ethnic gap observed 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 to whether the mean or selected quantiles of the conditional wage distribution is examined.