Informal Workers and Income Inequality in the Context of COVID-19 in Vietnam

Abstract

This study provides empirical evidence on the impact of COVID-19 on the number of working hours and income of informal workers, thereby affecting overall income inequality in Vietnam. The least squares, Heckman Selection, Theil L index, and Blinder-Oaxaca decomposition method were implemented in the study. The results show that Vietnamese informal workers’ working hours and income have decreased significantly due to the COVID-19 pandemic. The study also demonstrates that informal workers are the main cause of overall income inequality in Vietnam. The group of labor-employment and geographic characteristics increased income inequality within the informal workers group, while the opposite trend was true for the group of individual characteristics. Notable, this study analyzes the reduction in informal workers’ working hours and income in Vietnam instead of approaching the reduction level as in previous analyses. It not only points out the causes of changes in overall income inequality but also evaluates the role of informal workers in this relationship. This is expected to be an overview of informal workers and income inequality in the context of COVID-19 in Vietnam.