Convergence of public and private enterprise wages in a transition economy: Evidence from a distributional decomposition in Vietnam, 2002–2014

Abstract We examine the transition of state-owned enterprises (SOEs) in Vietnam during the period 2002–2014 from a wage perspective by decomposing the differences in wage distributions between SOE employees and non-SOE employees. Although SOE employees received higher pay in 2002 because of differences in the characteristics and residuals, the differences in coefficients were minimal along the wage distribution during 2002–2014. The differences in characteristics decreased over time in the middle and middle-to-high wage distribution groups. University graduates were the main contributor to the difference in endowments. By 2014, the residuals difference vanished and the pay schemes between SOEs and non-SOEs converged.