Tran Thi Hieu Master’s Thesis VNP20-2015 UNIVERSITY OF ECONOMICS, HO CHI MINH CITY VIET NAM – NETHERLANDS PROJECT FOR M. PROGRAM IN DEVELOPMENT ECONOMICS IS GENDER PAY GAP LOW IN PLANTS WITH MORE FEMALE MANAGERS? EVIDENCE FROM SMALL AND MEDIUM ENTREPRISES OF VIETNAM 2007 ----------o0o--------- A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By Tran Thi Hieu Supervisor Dr. Pham Dinh Long Nov – 2015 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 ABSTRACT The goal of gender equality in income is not only an important matter of human rights but also basic requirement for development of fair and efficiency. Therefore, study on the state of gender inequality in income has the significant implications in moving toward the equality in society and enhancing the efficiency of economic and social growth.
Actually, there have been many previous studies related to the issues of gender income difference, particularly the factors impact on reducing the gender gap in earnings. Inheriting these previous researches, my dissertation attempts to investigate whether the gender gap in earnings is low in the establishments with more female managers. Using a sample size of 1043 employees and 2492 enterprises were surveyed in the Small and Medium Enterprises (SME) in Vietnam in the year of 2007, matching employer and employee data and distinguishing occupation the study ends up 345 job–cells. In addition, ordinary least squares modeling and ordinary least square with job-cell fixed effects are applied to explore the effect on male – female income difference of proportion of female manager.
Various explanatory variables for characteristics of workers and plants are used as control variables. Result reveals that there is a negative relationship between the female share in managers and gender pay gap, and the education has a significant statistic and strong impact on the wage of the labors. Key words: Gender pay gap, matched employee – employer data LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 ACKNOWLEDGEMENTS This thesis is completed with not only painful process but also enjoyable experience. Fortunately, throughout the process I always got a lot of helps and supports from many people in order to make thesis possible.
On the same occasion, I would like to express my gratitude to all of them. Foremost, I would like to give my sincere gratitude and special appreciation to my academic supervisor Dr. Pham Dinh Long, for his patience, motivation, enthusiasm, and immense knowledge. His guidance helped me in all the time of research and writing of this thesis.
Similarly, I sincerely thank to the Scientific Committee and staffs of Vietnam-Netherland Program for their willingness to provide information during the last time. Last but not the least, I would like to thank my family and classmate at VNP20 for their backing and helping so that I can complete this thesis. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 TABLE OF CONTENTS CHAPTER 1: INTRODUCTION. Structure of research.
9 CHAPTER 2: LITERATURE REVIEW. Gender gap in earnings. Cause of gender wage gap and the factors impact on gender wage gap 12 2. Cause of gender wage gap.
The factors impact on gender wage gap. Non-economic factor. Characteristics of employee. Measurement of gender pay gap.
The impact on economic - social development of gender wage gap. The impact on male – female income difference of female manager. 20 CHAPTER 3: OVERVIEW OF GENDER WAGE GAP IN VIETNAM. Overview the status of gender gap in earnings in Vietnam.
The factors impact on male – female income difference. The age of employee. 32 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 3. Age of employee.
Size and Industry. The Econometrics Models and Results. 37 CHAPTER 5: CONCLUSION, POLICY IMPLICATIONS AND LIMITATIONS .Error! Bookmark not defined. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 LIST OF TABLES Table1: Human development index and Human development index in Southeast Asia Area.
25 Table2: The share of women’s labor force participation. 26 Table 3: The share of female in plants. 27 Table 4: Summary statistics. 38 Table 5: Wages and female shares in managers.
38 Table 6: Wages regression. 39 LIST OF APPENDICES Appendix 1: Correlation of variables. 47 Appendix 2: Statistics variables. 47 Appendix 3: OLS wage regression.
48 Appendix 4: OLS wage regression with job – cell fixed effect. 49 Appendix 5: Test for heteroskedasticity. 49 Appendix 6: Test for multicollinearity. 50 Appendix 7: The individual categories of ISIC.
50 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 ABREVIATIONS ILO International Labor Organization VGCL The General Labor Confederation of Vietnam SMEs Small and medium enterprises DWC Division of Workers’ Compensation CEDAW The Convention on the Elimination of all forms of Discrimination against women OECD Organization for economic co-operation and development STEM Science, Technology, Engineering and Mathematics WB World Bank GDP Gross domestic product HLM Hierarchical linear modeling OLS Ordinary least square EEOC Equal employment opportunity commission HDI Human Development Index GDI Gender Development Index of Vietnam UNDP United Nations Development Programme WEF World Economic Forum GSO The General Statistics Office of Vietnam VHLSS Vietnam Household Living Standards Survey 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 CHAPTER 1: INTRODUCTION 1. Problem statement Gender pay gap is a global problem. Indeed, according to Nguyet and Binh (2007), male – female income difference is not only one of the root causes of poverty but also major factor that distributes to hinder the development process. The greater gender gap in earnings are, the more poverty it has to pay dearly for that as well as more malnutrition status, illness and other hardships.
In addition, economic growth will bring more effective for the reduction of poverty level in the country which has a higher level of gender equality. Moreover, inequalities in income between women and men prevent the equal development and this makes the use of resources in society inefficient. In fact, the situation of gender inequality in earnings occurred in many countries, especially in the developing countries. It might be said that the cause of this condition primarily rooted traditional perspectives and preconceived ideas in the social about the male-supremacy in many countries.
Thereby, these lead to the restriction of opportunities for women to access the education and training, the choice of professions, an opportunity to improve professional qualifications. The distribution of labor between men and women in different occupations, employment arrangements and job positions in the same business line is also obvious differences, which greatly affected on the difference in gender income. Furthermore, women also have fewer opportunities to access to these services as well as other basic resources such as water, transportation and marketing, capital, etc. These things certainly impact on their improvement of the condition and economic status.
In Vietnam, as reported by the International Labor Organization (ILO) on 7th March, 2013, the gap of income between men and women in Vietnam was continuously increasing while the proportion of women in work force was 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 higher than other countries in the world. Approximately 72% of women participated in the labor force in Vietnam and this ratio was higher than that in most of other countries worldwide. Nevertheless, Vietnam was one of the few countries where the gender wage gap was increasing in contrast with the trend in most of other countries in the 2008-2011 period compared with the period 1999-2007. Moreover, according to the 2012-2013 Global Wages Report of the ILO, gender income gap of Vietnam increased by 2% in the recent period.
Statistical data of the General Department of Statistics in 2011 indicated that women's income was lower than men’s income, approximately 13%. Also, the General Labor Confederation of Vietnam (VGCL) conducted a survey of employees’ salary in enterprises in 2012. This organization saw that wage of female workers was less, only 70-80% of their male colleagues. Besides, Labor Survey Report published in 2012 stated the average monthly income of women was less than men’s in all economic sectors, state, non-state and foreign investment.
Even in occupations which primarily recruited focus on women such as health care, social work and sales, women still had a lower salary than male fellowship. More specifically, the VGCL survey found that women often did the normal work whereas male undertook the management positions. Due to the important of this field, there were thus a lot of researches about gender pay gap conducted in the past indicating the determinants of difference in wage of women and men as well as providing solutions to reduce this gap such as Anderson, Tracy, et al (2001), Hultin and Szulkin (2003), Manning (2006), Blau and Lawrence (2007), Cohen and Huffman (2007), Becker (2010), Cardoso and Winter-Ebmer (2010), Spencer (2015). In Vietnam, studies about gender gap in earnings there are Liu (2002), Pham and Barry (2007) and so on.
Interestingly, related to the solutions given by the researchers in order to reduce gender income differences, there was the relationship between female share in managers and gender wage gap. Particularly, in the research of Hultin and Szulkin (2003) namely “Mechanisms 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 of inequality unequal access to organizational power and the gender wage gap”, the authors used the multilevel models in order to analyze the dataset of Swedish which combined the information on a large number of private – sector enterprises and all their employees. The finding showed that gender gap in income in plants were wider while there were more male representations among managers and supervisors in these enterprises and low relative wage of female worker in plants in which there were no or only a few women in managerial position. Another notable research, Hirsch’s paper (2013) is one of these above studies, through the evidences from linked employer – employee data for Germany, Hirsch found that gender income difference decreased by 0.5 log point when increased the female share in first level management by 10% points.
Therefore, follows the cornerstones of Hirsch’s research and applies for the case of Vietnam in order to investigate the relationship of female share managers and gender pay gap, this study is conducted particularly in small and medium enterprises (SMEs) in Vietnam in the year of 2007. Research objective The objective of the study is an analysis to find out whether or not the women have an important role in the case of reducing the gender income difference when they stand in the assembly line of managers in small and medium plants in Viet Nam. This research is also conducted to answer the main question that is gender pay gap low in plants with more female managers? And for the scope of study, it is undertaken in SMEs in Vietnam in the year of 2007. 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 1.
Structure of research The research is organized as follows. In chapter one, problem statement and objective research are presented. Chapter two provides concepts related to the literature review, the definitions and the causes as well as the factors impact on gender pay gap. Chapter three presents the overview of gender gap in Vietnam.
Chapter four presents data description, introduces methodology method used, gives the estimated results. Finally, conclusion, policy suggestions and limitations are highlighted in the last - chapter five. 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Tran Thi Hieu Master’s Thesis VNP20-2015 CHAPTER 2: LITERATURE REVIEW This chapter presents the overview of theory and discusses previous studies relates to the research.