PUBLICATIONS & REPORTS

Contents Introduction

This paper examines relationships between producer concentration, firm ownership, and employee compensation in Vietnam’s manufacturing enterprises in 2000, 2002, and 2004. Simple calculations indicate that multinational corporations (MNCs) paid the highest compensation followed by state-owned enterprises (SOEs) and finally by private firms. After controlling for the effects of producer concentration and other technical determinants of compensation levels (e.g., factor intensity, scale, labor quality), compensation differentials are greatly reduced. MNCs still paid an average of about one-third to one-half more than private firms while SOE-private differentials became very small or negative. These differentials varied markedly among industry groups, however. The relationship between producer concentration and compensation levels was usually positive in samples of all manufacturing firms but negative in about half of the eight industry groups examined. Cross section estimates also indicate that larger MNC and SOE presence was associated with higher compensation in private firms in 2002 and 2004, suggesting positive spillovers from both SOEs and MNCs in these two years. However, fixed effects panel estimates, which examine the question of how SOE and MNC presence affected changes in private firm compensation over time, suggest that compensation in private firms tended to fall relatively rapidly in industries where SOE presence was large and producer concentration high, while MNC presence had no significant effect.