The impact of trade and investment liberalization on the wage skill premium: evidence from Vietnam

This paper examines the impact of trade and investment liberalization on the wage skill premium between skilled and unskilled workers in Vietnamese manufacturing. The result from an econometric analysis using a firm-level dataset reveals the important role of trade liberalization as an impetus for narrowing the skill premium. There is also evidence that foreign investment has a significant effect on widening the wage skill premium. More importantly, export-oriented foreign investment is likely to play an important role in the determination of the wage skill premium in the Vietnamese manufacturing.