"The impact of minimum wage adjustments on Vietnamese wage inequality"
Using Vietnamese Labour Force Survey data we exploit a major minimum wage policy change in 2012 to analyze 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 unanticipated minimum wage change decreased 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.
Contact person: Miriam Gensowski