Academic journal article International Advances in Economic Research

Discrimination against Migrants in Urban Vietnam

Academic journal article International Advances in Economic Research

Discrimination against Migrants in Urban Vietnam

Article excerpt


In 2009, migrant workers in the two major cities of Vietnam, Hanoi and Ho Chi Minh City, earned 42% less per hour than did non-migrant ("resident") workers. In this paper we ask why this gap is so large, and whether discrimination against migrants plays a role. The issue merits attention, because migrants constitute 36% of the population of Ho Chi Minh City and 18% of the population of Hanoi (Anh et al. 2016).

The wide earnings gap raises the possibility that migrants in these two cities face strong headwinds. We define urban migrants as those who do not have an official residence permit Qio khau) that allows them legally to live permanently in the city. (1) The ho khau gives residents access to subsidized health care, education, and some social benefits (Cameron 2012; Anh et al. 2016). Migrants may also face discrimination as they look for jobs and negotiate pay, due to sucCh factors as differences in language skills, ethnicity, networks of contacts, and information on job opportunities (Nguyen and Minh 2016; Borjas 2015).

On the other hand, the lower wage rate may simply reflect the more modest levels of education and work experience of migrants. Given their small families and propensity to work longer hours, the income poverty headcount rates among migrants in Ho Chi Minh City and Hanoi are both low (1.2% in 2009) and comparable to that of residents (0.5%) (Haughton et al. 2010, p. 96). Earnings gaps between residents and migrants are widely observed in developing countries (Cai 2001; Meng 2001). The approach we take is to separate the earnings differential into a part that can be explained by individual characteristics such as education (the explained or endowment effect), idiosyncratic effects (the unexplained component, which may be due to discrimination), and their interaction (joint effects), first using a Blinder-Oaxaca decomposition, and then disaggregating further using the method proposed by Brown et al. (1980).

A broadly similar approach has been applied to understanding the earnings gap between migrants and residents in China, where residence permits (hukou) are also important. In 2016, over a quarter of those living in Chinese cities (i.e. 218 million people, out of 796 million) did not have a hukou, and had less access to education, medical care, housing, and formal-sector employment than those residents who did have a permit (den Hartog 2014; population data from the United Nations 2018; hukou data from Xinhua, February 9,2017). Thus, the first contribution of our paper is to examine the case of Vietnam, both because the country is large enough to be important in its own right, but also because it helps us understand whether the findings for Chinese cities are unique to that country, or more broadly applicable. Our estimated earnings equations, which take account of possible selectivity bias, are themselves of interest because they allow one to begin to estimate the impact of education (and other socio-demographic variables) on earnings. A strength of our study is that it uses data from a very carefully designed and executed survey of migrants and residents that was undertaken in 2009.

Urban Migration in Vietnam

By 2009, 30% of the population of Vietnam was living in urban areas, up from 20% in 1991 and just 10% in 1954 (World Bank 2011). Much of this increase was propelled by rural-to-urban migration, so that, according to the 2009 Census, 2.1 million out of the 23.2 million urban dwellers (i.e. 8.9%) had moved to the towns and cities within the previous five years, a figure that does not include temporary or short-stay migrants (Le et al. 2011; Liem and Minh 2011). Boosted by migration, the population in the urban districts of Ho Chi Minh City rose from 2.7 million in 1979 to 5.9 million in 2009, while that of Hanoi increased from 0.9 million to 2.6 million over the same period.

Urbanization actually declined between 1971 and 1981, when the economy was run by central planning. …

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