Gender pay gap in Vietnam: a propensity score matching analysis

Abstract

Purpose: This paper investigates the extent, the determinants and the change in the gender pay gap in Vietnam in the period 2010–2016 in order to provide suggestions for policy adjustment to narrow gender pay inequality more effectively. Design/methodology/approach: This study employs the propensity score matching (PSM) method to examine inequality in pay between female and male earners sharing identical characteristics. The analysis is conducted for both the full sample and various characteristic-based subsamples. This procedure is conducted for 2010 and 2016 separately to discover the change in gap and inequality during this period. Findings: The matching results based on the data sets taken from the Vietnam Household Living Standards Survey (VHLSS) 2010 and 2016 affirm that gender income inequality in Vietnam, though persisted, decreased significantly in 2016 compared to 2010, and was insignificant in many subsamples in 2016. In addition to the observable determinants including educational level, occupation, economic sector and industry, unobservable factors are proved to also play an important role in creating the gender pay gap in Vietnam. Practical implications: The research findings suggest that policies aimed at mitigating gender pay inequality should take into account both observable characteristics and unobservable factors such as unobservable gender differences that affect wages and gender discrimination in pay. Originality/value: This is the first study using a matching technique to investigate gender wage gap in Vietnam. With up-to-date data, longer research period and the superiority of the method used in dealing with sample selection bias, the results obtained are more robust, more detailed and reliable.