This study documents various facts in order to understand the evolution of income inequality and suggest possible causes of income inequality in Vietnam based on data of Vietnam Household Living Standards Survey (VHLSS) during 2002-2012. The study found the national Gini coefficients were mostly influenced by the South East region of Vietnam where average monthly income per capita was highest. The rural-urban ratios of income were lower while the income ratios between the richest quintile and poorest quintile kept increasing. Possible reasons of the rising income inequality in Vietnam were the declining share of farm sector and the increasing share of non-farm sectors during 2002-2012.

This study documents various facts in order to understand the evolution of income inequality and suggest possible causes of income inequality in Vietnam based on data of Vietnam Household Living Standards Survey (VHLSS) during 2002-2012. The study found the national Gini coefficients were mostly influenced by the South East region of Vietnam where average monthly income per capita was highest. The rural-urban ratios of income were lower while the income ratios between the richest quintile and poorest quintile kept increasing. Possible reasons of the rising income inequality in Vietnam were the declining share of farm sector and the increasing share of non-farm sectors during 2002-2012.

TABLE OF CONTENT
ABSTRACT i
ACKNOWLEDGEMENTS ii
CHAPTER 1: INTRODUCTION 1
CHAPTER 2: THE COUNTRY BACKGROUND 4
2.1. Agricultural reform 4
2.2. Enterprises reform 6
2.2.1. State-owned enterprise policy 6
2.2.2. Private enterprise policy 6
2.3. Labor market reform 7
2.3.1. Wage payments 7
2.3.2. Non-wage payments 9
2.4. Member of World Trade Organization 9
2.5. Vietnam’s economic growth 10
2.6. Vietnam’s employment patterns 12
CHAPTER 3: LITERATURE REVIEW ON INCOME INEQUALITY 13
3.1. Concept of income inequality in general 13
3.2. Drivers for income inequality in general 14
3.3. Income inequality in Vietnam 15
3.4. Influence of Vietnam’s policies over income inequality 18
CHAPTER 4: METHODOLOGY AND DATA 20
4.1. Methodology 20
4.2. Data description 21
CHAPTER 5: FINDINGS OF INCOME INEQUALITY IN VIETNAM 22
5.1. Evolution of income inequality in Vietnam 22
5.1.1. Income inequality in eight major regions 22
5.1.2. Income inequality in urban-rural areas 29
5.1.3. Income inequality among five population quintiles 30
5.2. Possible causes of income inequality through income composition by sources 31
5.2.1. Composition of national income by sources 32
5.2.2. Composition of urban and rural incomes by sources 33
5.2.3. Composition of incomes in the richest and the poorest quintiles by sources 34
5.3. Possible causes of income inequality through employment structure 36
5.3.1. Employment structure of the whole country 36
5.3.2. Employment structure of urban versus rural areas 37
5.2.4. Employment structure of the richest versus poorest quintile 38
5.4. Possible causes of income inequality through average annual income per worker 39
CHAPTER 6: CONCLUDING REMARK 42
DATA SOURCES 44
REFERENCES 44

DATA SOURCES
General Statistics Office of Vietnam (2013). Data results of the Viet Nam Household Living Standards Survey 2012. Retrieved June 10, 2014, from http://www.gso.gov.vn/Modules/Doc_Download.aspx?DocID=16764
General Statistics Office of Vietnam (2011). Result of the Vietnam household living standards survey 2010. Retrieved June 20, 2014, from http://www.gso.gov.vn/Modules/Doc_Download.aspx?DocID=15084
General Statistics Office of Vietnam (2013). Average population by province. Retrieved May 26, 2015 from http://www.gso.gov.vn/default_en.aspx?tabid=467&idmid=3&ItemID=12939
World Bank (2014). GDP growth (annual %). Retrieved Dec. 12, 2014, from http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries/1W?display=d efault
REFERENCES
Amy Y. C. Liu. (2008). Changes in urban inequality in Vietnam: 1992–1998. Journal of Economic Systems, 32, 410-425. DOI: 10.1016/j.ecosys.2007.10.002
Asia Development Bank. (2007). Inequality in Asia. In Key Indicators 2007. Manila.
Benjamin, D., & Brandt, L. (2002). Agriculture and income distribution in rural Vietnam under economic reforms: A tale of two regions. Washington, D.C.: World Bank.
Binh T. Nguyen, James W. Albrecht, Susan B. Vroman, M. Daniel Westbrook. (2007). A quintile regression decomposition of urban-rural inequality in Vietnam. Journal of Development Economics, 83, 466-490. doi:10.1016/j.jdeveco.2006.04.006.
Cao, T. C. V., & Akita, T. (2008). Urban and Rural Dimensions of Income Inequality in
Vietnam (Master dissertation, International University of Japan).
Cling, Jean-Pierre, Marouani, M.A., Razafindrakoto, Mireille, Robilliard, Anne-Sophie, &
Roubaud, François. (2009). The distributive impact of Vietnam's accession to the WTO. Economie Internationale, 118, 43-71. ISSN 1240-8095.
Cornia, G. A. (2003). The impact of liberalisation and globalisation on income inequality in developing and transitional economies. Munich: Univ., Center for Economic Studies.
Dollar, D., Glewwe, P., & Litvack, J. I. (1998). Household welfare and Vietnam's transition. Washington, D.C: World Bank.
Dollar, D., & Litvack, J. (1998). Macroeconomic reform and poverty reduction in Vietnam. In D. Dollar, P. Glewwe, and J. Litvack, eds., Household Welfare and Vietnam’s Transition. Washington, D.C: World Bank.
Friedman, J. (2004). Firm ownership and internal labour practices in a transition economy. Economics of Transition. DOI: 10.1111/j.0967-0750.2004.00181.x.
Fritzen, S. (2002). Growth, inequality and the future of poverty reduction in Vietnam.
Journal of Asian Economics, 13, 5, 635-657.
Fritzen, S. & Brassard, C. (2005). Vietnam Inequality Report 2005: Assessment and Policy
Choices. Mekong Economics Ltd. Synthesis Paper of the “DFID Drivers of Inequality in Vietnam” Project.
Gallup, J. L., & World Bank. (2002). The wage labor market and inequality in Vietnam in the
1990s. Washington, D.C: World Bank, Macroeconomics and Growth, Development Research Group.
Glewwe, P. (2004). An overview of economic growth and household welfare in Vietnam in the 1990s. Washington, D.C.: The World Bank, pp. 1-26.
Glewwe, P., Agrawal, N., & Dollar, D. (2004). Economic Growth, Poverty, and Household Welfare in Vietnam. Washington, DC: World Bank.
Glewwe, P., Gragnolati, M., & Zaman, H. (1999). Who gained from Vietnam's boom in the
1990s? An analysis of poverty and inequality trends. Washington, D.C: World Bank, Development Research Group.
Gollin, D., Parente, Stephen L. & Rogerson, R. (2007). The food problem and the evolution of international income levels. Journal of Monetary Economics, Elsevier, 54(4), 1230- 1255.
Heltberg, R. (2003). Inequality in Vietnam: A Regression-based Decomposition. The UNU-
WIDER Conference on Inequality, Poverty and Human Well-Being, Helsinki.
Kremer, M. and E. Masking. (2006). Globalization and Inequality. Working Paper 2008- 0087, Weatherhead Center for International Affairs, Harvard University, Cambridge, MA.
Martin Ravallion, & Dominique van de Walle. (2008). Does rising landlessness signal success or failure for Vietnam’s agrarian transition?. Journal of Development Economics, 87, 191–209. DOI:10.1016/j.jdeveco.2007.03.003
McCaig, B., Benjamin, D. & Brandt. L. (2009). The Evolution of Income Inequality in
Vietnam between 1993 and 2006. Toronto: University of Toronto.
McCaig, B., Pavcnik, N., & National Bureau of Economic Research. (2013). Moving out of agriculture: Structural change in Vietnam. Cambridge, Mass: National Bureau of Economic Research.
Michael Kirk, & Nguyen Do Anh Tuan. (2009). Land-tenure policy reforms:
Decollectivization and the Doi Moi system in Vietnam. International Food Policy Research Institute.
Minot, Nicholas, Epprecht, Michael, Anh, Tran Thi Tram, Trung, Le Quang. (2006). Income diversification and poverty in the Northern Uplands of Vietnam. International Food Policy Research Institute.
Nguyen, B., J. Albrecht, S. Wroman, & M. Westbrook. (2006). A Quantile Regression
Decomposition of Urban-Rural Inequality in Vietnam. Manila, Philippines: ADB Working Paper (No. 2006.2), Asian Development Bank.
Nguyen, C., & Tran D. (2006). The Impact of Trade Liberalization on Household Welfare in
Vietnam. MPIA Working Paper (No. 2006-02), MIMAP-Vietnam Project, International Development Research Centre, Canada.
Nguyen, K. T. (2014). Economic reforms, manufacturing employment and wages in Vietnam
(Doctoral dissertation, Australian National University).
Norlund, I. (1993). The creation of a labour market in Vietnam: legal framework and Practices. In CA Thayer & DG Marr (eds), Vietnam and the Rule of Law, Canberra: the Australian National University.
O’Connor, D. C., & Organisation for Economic Co-operation and Development.
(1996). Labor market aspects of state enterprise reform in Viet Nam. Paris: Organisation for Economic Co-operation and Development.
OECD (2012). China in focus: Lessons and challenges, Chapter 2: Inequality: Recent Trends in China and Experience in the OECD Area. OECD Publishing.
Scott Fritzen. (2002). Growth, inequality and the future of poverty reduction in Vietnam. Journal of Asian Economics, 13, 635-657.
Seshan, G., & World Bank. (2005). The impact of trade liberalization on household welfare in Vietnam. Washington, D.C: World Bank.
Tom Berliner, Do Kim Thanh, & Adam McCarty. (2013). Inequality, Poverty Reduction and the Middle-Income Trap in Vietnam. The EU Delegation to Vietnam
Van, A. B., & Mallon, R. (2004). Viet Nam: A transition tiger?. Canberra: ANU E Press.
Vietnam (2011). Report on the 2010 Vietnam labor force survey. Hanoi: Ministry of Planning and Investment, General Statistics Office.
Vietnam (2011). Result of the survey on households living standards, 2010. Hanoi: Statistical Pub. House.
Viện khoa học xã hội Việt Nam. (2007). Vietnam poverty update report 2006: Poverty and poverty reduction in Vietnam 1993-2004. Hanoi: The National Political Publishers
Vu, T. A. (2008). Regional Poverty Disparity in Vietnam. Hanoi, Vietnam: Socio-Economic Development Centre
Walle, D. & Cratty, D. (2003). Is the emerging non-farm market economy the route out of poverty in Vietnam?. Washington: The World Bank, Development Research Group, Public Services.
Woojin Kang, & Katsushi S. Imai. (2010). Pro-poor growth, poverty and inequality in rural Vietnam. Journal of Asian Economics. DOI: 10.1016/j.asieco.2012.04.004
World Bank. (2013). Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises. Washington, DC: World Bank Group. DOI: 10.1596/978-0-8213-9615-5.
Websites
Compound Annual Growth Rate - CAGR (n.d). Retrieved January 1, 2015, from http://www.investorwords.com/1008/Compound_Annual_Growth_Rate.html
Compound Annual Growth Rate - CAGR (n.d). Retrieved January 1, 2015, from http://www.businessdictionary.com/definition/compound-annual-growth-rate- CAGR.html
Gini coefficient (n.d). Retrieved January 1, 2015, from http://www.businessdictionary.com/definition/Gini-index.html
How to get Gini coefficient using Excel (n.d). Retrieved January 1, 2015, from http://uym.music.coocan.jp/pasocom/gini_en.html
How to calculate Gini ratio (n.d). Retrieved January 1, 2015, from http://www.ehow.com/how_8352970_calculate-gini-ratio.html
List of regions in Vietnam (n.d). Retrieved October 1, 2014 from http://www.nationsonline.org/oneworld/map/vietnam-administrative-map.htm
Nominal income (n.d). Retrieved January 1, 2015, from http://www.businessdictionary.com/definition/nominal-income.html#ixzz3QOJFIURG
University of Southern Queensland (n.d). Retrieved November 20, 2014, from http://www.usq.edu.au/library/referencing/apa-referencing-guide
World Bank (2014). Inequality in Vietnam: a special focus of the taking stock Report July
2014. Retrieved Dec. 12, 2014, from http://www.worldbank.org/en/news/feature/2014/07/08/inequality-in-vietnam-a-special-focus-of-the-taking-stock-report-july-2014