Role of Individual Characteristics and Policies in Driving Labor Informality in Vietnam

Author/Editor:

Era Dabla-Norris ; Giovanni Ganelli ; Anh Thi Ngoc Nguyen ; Mai Thi Thanh Nguyen ; Thuy Thi Thu Vu

Publication Date:

December 11, 2020

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Using data from the Vietnam Labor Force Survey, this paper takes a granular look at the most salient drivers of labor informality in Vietnam by examining: (i) the nature of labor informality and transitions from formal to informal employment status and the role of worker characteristics; (ii) the empirical likelihood of being in informal employment and the policy determinants of informality using within-in country variation in the business climate and governance; and (iii) whether different policy reforms have a differential impact on workers. Our analysis sheds light on how individual characteristics and policy impediments contribute to high levels of informality and points to the need for a comprehensive agenda to tackle informality.

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