Wage Differentials among Ownership Groups and Worker Quality in Vietnamese Manufacturing

Abstract

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Ownership-Related Wage Differentials by Occupation in Vietnamese Manufacturing

“…Although these results have been obtained from a relatively small sample of 7795 manufacturers in 2009, it is important to emphasize that two key results are consistent with results from a previous study (Nguyen and Ramstetter, 2017) estimating the mean wage differential for all workers combined, and using larger samples for two very different years, 2009 (10,698 firms) and 2007 (10,221 firms). First, JVs tend to pay the most, but conditional JV-private and WF-private differentials for all paid workers combined were of similar magnitude (23-31%).…”

“…1 Although this study has the well-known shortcomings of cross-sectional analyses, it is possible to lag key independent variables using 2008 data and partially account for simultaneity issues often thought to affect such estimates. Perhaps, more importantly, ownership-related wage differentials for all workers were qualitatively similar in 2007 and 2009 (Nguyen and Ramstetter, 2017). This consistency is an important robustness check because firm-level data on worker education are only available in these years and because the macroeconomic environment was very different in 2007 (good) and 2009 (poor).…”

“…Foreign multinational enterprises (MNEs) often pay higher average wages than domestic firms or plants in manufacturing industries of host, developing economies. Analyses of large samples of plant-level data for Indonesia (Lipsey and Sjöholm, 2004;Ramstetter and Narjoko, 2013) and Malaysia (Ramstetter, 2014), as well as firm-level data (Ramstetter and Phan, 2007;Nguyen and Ramstetter, 2017) or worker data (Fukase, 2014a,b) for Vietnam also suggest that positive wage differentials often remain statistically significant after accounting for the influences of worker sex, education and/or occupation and plant or firm capital or input intensity and size or the influences of worker characteristics.…”

“…In addition, only limited information is collected from very small local firms with 10 or fewer employees(Jammal et al, 2006). 11 This sample is substantially smaller than the sample of 10,698 firms with 3.12 million paid workers used inNguyen and Ramstetter (2017) because that study includes firms that had zero paid employees or wages for any one of the four occupation categories, whereas this study excludes such firms.…”

Education As Protection? The Effect of Schooling on Non-Wage Compensation in a Developing Country

“…Ownership might affects the possibility that a firm provides non-wage benefits for its employees. For example, Nguyen and Ramstetter (2017) find that ownership structure contributes to wage differentials among workers who work for manufacturing firms in Vietnam. Nguyen and Ramstetter show that foreign companies, and stated-owned and large firms tends to pay a higher wage than small-sized domestic enterprises in this emerging economy.…”