Race to the bottom: Labor forces, policy and immigration in Vietnam

This paper examines the interplay between labor market dynamics, internal migration, and institutional reforms in shaping income inequality across 63 Vietnamese provinces from 2012 to 2022. Drawing on the race-to-the-bottom framework, we employ a Two-Way Fixed Effects panel regression and a Difference-in-Differences approach to assess the causal impact of unemployment, labor migration, urbanization, and social welfare spending. Our findings reveal that while unemployment and migration intensify inequality, urbanization and welfare spending mitigate it. The 2014 Law on Investment exhibits uneven effects, benefiting industrialized provinces more significantly. These insights underscore the need for regionally tailored labor and welfare policies to promote inclusive development. By bridging insights from sustainable development theory and innovation diffusion, the study contributes to a more nuanced understanding of how growth trajectories intersect with ecological governance in emerging economies.