Topics: Economic inequality, Income, Income distribution Pages: 27 (7713 words) Published: September 24, 2013
Faculty of Economics and International Business

Determinants of Income Distribution Inequality in Vietnam
Group 5B:
Lê Thị Hồng Hạnh

Lê Huy Hoàng

Đỗ Trung Kiên

Mai Diệu Ly

Đặng Thị Thúy Vân

Lecturer : Nguyễn Thị Hải Yến

1. Literature review of determinants of income inequality 2 2. Income distribution inequality in Vietnam 7
2.1. Situation .. 7
2.1.1. Gini index 8
2.1.2. Income by quintile 9
2.1.3. Income by region 10
2.2. Causes .. 10
2.2.1 Economic restructuring and globalization 11
2.2.2 Inequality of services access 12
2.2.3 Asset inequality 13
2.3. Impacts .. 13
2.3.1. Economic impacts 13
2.3.2. Health and social impacts 15
2.3.3. Political impacts  16
2.3.4. Comments 17
3. Regression model 17
3.1. Model specification 17
3.2. Econometrics models 19
3.3. Interpretation 23
4. Government policies 24
Conclusion 29
Reference 30
Usually, during the long way to become developed countries, developing and emerging nations have been trading off many things, industry expansion versus environment purity, international integration versus cultural maintenance and improvement, etc. Among them, there always exists a problem that all developing countries like Vietnam are facing with, income distribution inequality. Vietnam has seen a continuous growth in recent years and moved from low income class to lower middle income country. That is a huge effort of Vietnamese economy and policy makers. However, we are coping with disparity in income distribution and this problem tends to non-stop exacerbate over time. We are wondering the causes lying behind income inequality in Vietnam and what determine its changes. By that way, we would like to do this small research on such issue, figuring out its trend, causes and effects, giving comments on Vietnamese Government policies and suggesting something new from the experience of foreign countries if possible. Our report is composed of 4 parts, Literature review, Income distribution inequality in Vietnam, Regression models and Government policies respectively. In part one, we take you around the typical research papers with popular determinants of income inequality. Then part 2 shows you the current situation of income disparity in Vietnam, its causes and impacts. To support our research, we use econometrics model testing its determinants and proving hypothesis in part 3. The final one, part 4, just illustrates some policies or programs of our Government in tackling such situation in our point of view. 1. Literature review of determinants of Income Inequality

Income distribution inequality, or income inequality in short, is the situation of unequal distribution of household or individual income across the various participants in an economy, which is usually illustrated by Gini index. A number of empirical studies have attempted to explain income distribution from various standpoints by examining a broad range of factors on income inequality as discussed subsequently. Here are some determinants that have been regularly associated with income inequality: economic growth, globalization, population growth, urbanization, government expenditure, education inequality, inflation and democracy. The association between economic growth and income inequality was first analyzed by Kuznets (1955) who found an inverted U-shaped curve. That is, increased economic development is associated with increased inequality at lower levels of growth, but then shifts at some point beyond which increased development leads to decreasing inequality. Zlatko Nikoloski (1987) pointed out that measures of economic growth which would spur growth of the GDP per capita are associated with lower levels of inequality in the long run. Matthew O. Odedokun (WIDER) and Jeffery I. Round (2001), after running the...

References: 2. Ha Viet Quan (2012), Programme 135 – Sharing lessons on poverty reduction and development schemes for ethnic minorities in Vietnam, United Nation Publication.
3. GS. TSKH Nguyễn Ngọc Trân (5/2010), Bàn thêm về khoảng cách giàu nghèo ở Việt Nam.
4. Aboyade, O. (1978), Integrated Economics: A Case Study of Developing Economies. English Language Book Society.
5. A.A. Awe & Olawumi Ojo Rufus (2012), Determinants of Income Distribution in the Nigeria Economy: 1977-2005.
6. Andy McKay, Finn Tarp (2012), Welfare Dynamics in Rural Vietnam, 2006 to 2010.
8. Barro, R. J. (2000), Inequality and Growth in a Panel of Countries’,Journal of Economic Growth.
9. Bulir, A. (1998), Income Inequality “Does Inflation Matter?”, IMF Working Paper.
10. Jason Furman, 1998, Joseph E. Stiglitz, Economic Consequences of Income Inequality, Proceeding.
11. Jong-sung You and Sanjeev Khagram, 2004, Inequality and Corruption, Hauser Center for Nonprofit Organizations Working Paper No. 22.
12. Jose, D., & Teilings, G. (2002), Determinants of Income Distribution. New Evidence from Cross Country Data, Korea University.
13. Karen Rowlingson, 2011, Does Income Inequality cause health and social problem?, Joseph Rowntree Foundation.
14. Kuznet, S. (1963), Quantitative Aspect of the Economic Growth of Nations: Distribution of Income by Size. Economic Development and Cultural Change.
15. Luigi Pasinetti, 1962, Rate of Profit and Income Distribution in Relation to the Rate of Economic Growth, The review of Economic Studies.
17. Odedokun, M.O., & Jeffery, I. (2001), Determinants of Income Inequality and Its Effects on Economic Growth: Evidence from African Countries.
18. Oded Galor, 2004, Omer Moav, From Physical to Human Capital Accumulation: Inequality and the Process of Development, The review of Economic Studies.
20. Yasir Khan & Meenal Javed (2011), An investigation into the determinants of income inequality and testing the validity of the Kuznets Hypothesis – Evaluating its relevance within Japan and China over time.
21. Zlatko Nikoloski (1987), Economic and Political Determinants of Income Inequality.
2. United Nation (2008), Investment Policy Review, Vietnam, United Nation Publication.
3. General Statistic Office (2008), Enterprises’data of the year 2000-2008
5. Minquan Liu and Yimeng Yin (2010), Human Development in East and South East Asian Economies 1990-2010, Human Development Research Paper, United Nations Development Programme.
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