Economic Transition and the gender wage gap in Vietnam:1992-2002

This chapter examines changes in the gender wage gap from 1992 to 2002 during which period an increase in economic openness has come to be part of Vietnam’s reform process. While economic openness is associated with high growth, the benefits of such growth may not be gender- neutral as is sometimes assumed. Some studies find a decrease in the prices of agricultural goods produced by women, a ‘masculinisation’ of typically female employment such as in the textile industry, and a widening of the gender wage gap (for instance, Nicita and Razzar, 2003). Yet, other studies have shown that openness is beneficial to women, since it leads to less employer discrimination and a feminisation of the comparatively high- paid manufacturing sector. For instance, Oostendorp (2002) finds (trade) openness reduces gender wage gaps. These mixed results indicate that the effect of openness on women’s relative economic position could depend on factors that are not traditionally considered as gender related, such as the industrial composition of the liberalisation process, and the initial conditions of the economy (see Fontana, 2003). My chapter uses Vietnam as a case study to apply the inter- temporal decomposition method of Juhn et al. (1991) to examine explicitly the relationship between the degree of market reform (openness) and the gender pay gap by constructing a variable of the share of foreign- invested firms (joint ventures and 100 per cent foreign- owned companies) at the provincial level as a measure of openness. It addresses an important policy question, namely do women benefit as a result of economic liberalisation and subsequent economic growth? More specifically, does economic liberalisation change the industrial mix in such a way that it affects the extent to which females can reap the benefits of reform? Moreover, does the changing pace of reform in labour markets, along with economic growth rates, impact upon wage dispersion that affects men and women differently? Having outlined the broad parameters of the study, the next section of this chapter presents background material on Vietnam’s transition and the impacts on gender inequality. The third section describes the data and provides an overview of the level and distribution of wages of men and women in 1992, 1997 and 2002, and briefly describes the methodology. The fourth section presents the empirical findings, and the fi nal section concludes with some reflections for policy.