Skill-biased technological change in Vietnam

Previous research has found evidence for the existence of skill-biased technological change in both the USA and Europe. However, similar studies are still limited in developing countries. There has not been any previous research that measured skill-biased technological change in Vietnam. The research question that this study aims to answer is if there is a skill-biased technological change in Vietnam. Based on data collected from the Vietnam Household Living Standards Survey from 2004 to 2014, this thesis measures the skill-biased technological change in Vietnam by measuring relative skill productivity. Relative skill productivity is calculated using the elasticity of substitution between skilled and unskilled workers, skill premium, the respective factor augmenting technology term of unskilled workers, and the respective factor augmenting technology term of skilled workers. The thesis developed a regression model for estimating wage as informed by the Mincer (1974) wage equation. The findings provided evidence that skill-biased technological change occurred in Vietnam during the period 2004 to 2008. It also provided empirical evidence of the wage gap between skilled and unskilled workers, between male and female workers, and between urban and rural areas. This thesis provides policy recommendations to improve the wage differential and the skill of the workers in Vietnam