Labor structural transformation and unemployment rate in Vietnam: Testing in the frequency domain
0
Online Published:
25/12/2025
Section:
Economics and Economic Management
Main Article Content
Abstract
This study investigates the causal relationship between labor structural transformation and the unemployment rate in Vietnam over the period 2003-2023. Utilizing time-series data and frequency-domain causality testing, the research employs the Modified Lilien Index (MLI) to quantify the extent of labor reallocation across economic sectors. The empirical findings reveal that structural labor shifts exert a significant causal impact on unemployment in the medium and long term, while no clear effect is observed in the short term. Moreover, unemployment does not appear to influence labor reallocation in reverse. These results suggest that long-term policy interventions such as workforce reskilling, labor market information systems, rural-to-urban labor mobility incentives, and enhanced social protection are essential to sustainably mitigate structural unemployment. By applying frequency-domain analysis, the study offers a novel perspective on the temporal dynamics of labor market adjustments, contributing valuable empirical evidence for labor policy formulation in transitioning economies.
Keywords
Labor structural transformation; Structural unemployment; Frequency-domain analysis; Modified Lilien Index (MLI); Vietnam labor market
Article Details
Field of Economic (JEL Codes)
J19 - Other - Demographic Economics
References
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Ansari, M. R., Mussida, C., & Pastore, F. (2014). Note on Lilien and Modified Lilien Index. The Stata journal, 14(2), 398-406. https://doi.org/10.1177/1536867X1401400211
Autor, D. H. (2015). Why Are There Still So Many Jobs? The History and Future of Workplace Automation. The Journal of economic perspectives, 29(3), 3-30. https://doi.org/10.1257/jep.29.3.3
Bakas, D., Panagiotidis, T., & Pelloni, G. (2017). Regional and sectoral evidence of the macroeconomic effects of labor reallocation: a panel data analysis. Economic inquiry, 55(1), 501-526. https://doi.org/10.1111/ecin.12363
Barbier, E. B. (2013). Structural Change, Dualism and Economic Development: The Role of the Vulnerable Poor on Marginal Lands (Vol. 1 of 1). The World Bank. https://doi.org/10.1596/1813-9450-6456
Bates, J. M., & Granger, C. W. J. (1969). The Combination of Forecasts. OR, operational research quarterly, 20(4), 451-468. https://doi.org/10.1057/jors.1969.103
Belzil, C. (2000). Job Creation and Job Destruction, Worker Reallocation, and Wages. Journal of labor economics, 18(2), 183-203. https://doi.org/10.1086/209955
Breitung, J., & Candelon, B. (2006). Testing for short- and long-run causality: A frequency-domain approach. Journal of econometrics, 132(2), 363-378. https://doi.org/10.1016/j.jeconom.2005.02.004
Byun, Y., & Hwang, H.-s. (2015). Sectoral shifts or aggregate shocks? A new test of sectoral shifts hypothesis. Empirical economics, 49(2), 481-502. https://doi.org/10.1007/s00181-014-0878-7
Caroleo, F. E., Pastore, F., Signorelli, M., & Marelli, E. (2010). Structural Change and Regional Labour Market Imbalances in Transition. In (pp. 260-276). Palgrave Macmillan UK. https://doi.org/10.1057/9780230277403_13
Charette, M. F., & Kaufmann, B. (1987). Short-run variation in the natural rate of unemployment. Journal of macroeconomics, 9(3), 417-427. https://doi.org/10.1016/0164-0704(87)90006-1
Chen, Y., Bressler, S. L., & Ding, M. (2006). Frequency decomposition of conditional Granger causality and application to multivariate neural field potential data. Journal of neuroscience methods, 150(2), 228-237. https://doi.org/10.1016/j.jneumeth.2005.06.011
Ciner, C. (2011). Commodity prices and inflation: Testing in the frequency domain. Research in international business and finance, 25(3), 229-237. https://doi.org/10.1016/j.ribaf.2011.02.001
Demidova, O., Kolyagina, A., & Pastore, F. (2020). Marshallian vs Jacobs effects: Which is stronger? Evidence for Russia unemployment dynamics. Structural change and economic dynamics, 55, 244-258. https://doi.org/10.1016/j.strueco.2020.07.010
Dieppe, A., & Matsuoka, H. (2021). Sectoral Decomposition of Convergence in Labor Productivity: A Re-examination from a New Dataset. In: World Bank, Washington, DC.
Figura, A., & Wascher, W. (2010). The Causes and Consequences of Sectoral Reallocation: Evidence from the Early 21st Century. Business Economics, 45(1), 49-68. http://www.jstor.org.uwe.idm.oclc.org/stable/23491050
Fraser, N. (1990). Rethinking the Public Sphere: A Contribution to the Critique of Actually Existing Democracy. Social text(25/26), 56-80. https://doi.org/10.2307/466240
Garonna, P., & Sica, F. G. M. (2000). Intersectoral labour reallocations and unemployment in Italy. Labour economics, 7(6), 711-728. https://doi.org/10.1016/S0927-5371(00)00018-X
General Statistics Office. (2023). Vietnam Statistical Yearbook 2022. Statistical Publishing House.
Geweke, J. F. (1984). Measures of Conditional Linear Dependence and Feedback between Time Series. Journal of the American Statistical Association, 79(388), 907-915. https://doi.org/10.1080/01621459.1984.10477110
Gül, H., & Özer, M. (2018). Frequency domain causality analysis of tourism and economic activity in Turkey. European Journal of Tourism Research, 19, 86-97. https://doi.org/10.54055/ejtr.v19i.327
Hosoya, Y. (1991). The decomposition and measurement of the interdependency between second-order stationary processes. Probability theory and related fields, 88(4), 429-444. https://doi.org/10.1007/BF01192551
Hyatt, H. R., & McElroy, T. S. (2019). Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence. Labour (Rome, Italy), 33(4), 463-487. https://doi.org/10.1111/labr.12153
Kazamaki Ottersten, E. (1993). Sectoral shocks and structural unemployment: An empirical analysis. European Economic Review, 37(1), 115-133. https://doi.org/https://doi.org/10.1016/0014-2921(93)90073-J
Kerr, A., Wittenberg, M., & Arrow, J. (2014). Job Creation and Destruction in South Africa. The South African Journal of economics, 82(1), 1-18. https://doi.org/10.1111/saje.12031
Lilien, D. M. (1982). Sectoral shifts and cyclical unemployment. The Journal of political economy, 90(4), 777-793.
McCallum, B. T. (1975). Rational expectations and the natural rate hypothesis: some evidence for the United Kingdom. Manchester school of economic and social studies, 43(1), 56-67.
McMillan, M. S., & Rodrik, D. (2011). Globalization, Structural Change and Productivity Growth. In (pp. 17143). Cambridge: National Bureau of Economic Research, Inc.
Neelin, J. (1987). Sectoral Shifts and Canadian Unemployment. The review of economics and statistics, 69(4), 718-723. https://doi.org/10.2307/1935969
Nguyễn Minh, H. (2023). Thực nghiệm phân tích các nhân tố ảnh hưởng đến chuyển dịch cơ cấu lao động ở Việt Nam: Một tiếp cận của hồi quy không gian. Tạp chí Kinh tế và Ngân hàng châu Á(187), 30-40. https://doi.org/10.63065/ajeb.vn.2021.187.78857
Özer, M., İnal, V., Kırca, M., & Yavuz, N. Ç. (2022). The Relationship Between the Health Services Price Index and The Real Effective Exchange Rate Index in Turkey: A Frequency Domain Causality Analysis. Ekoist journal of econometrics and statistics, 26(36), 21-41. https://doi.org/10.26650/ekoist.2022.36.1108803
Ozer, M., & Kamisli, M. (2015). Frequency Domain Causality Analysis of Interactions between Financial Markets of Turkey. International business research (Toronto), 9(1), 176. https://doi.org/10.5539/ibr.v9n1p176
Phạm Thị, D., Nguyễn Thị Minh, N., & Nguyễn Thị Thu, H. (2023). Ảnh hưởng của thay đổi công nghệ đến chuyển dịch cơ cấu lao động ngành công nghiệp chế biến chế tạo ở Việt Nam. Journal of Trade Science, 40-50. https://doi.org/10.54404/JTS.2023.178V.04
Rutkowski, J. (2003). Rapid Labor Reallocation with a Stagnant Unemployment Pool: The Puzzle of the Labor Market in Lithuania. In (Vol. 1): The World Bank.
Samson, L. (1985). A study of the impact of sectoral shifts on aggregate unemployment in Canada. The Canadian journal of economics, 18(3), 518-530.
Suresh, K. G., Tiwari, A. K., Uddin, G. S., & Ahmed, A. (2018). Tourism, trade, and economic growth in India: a frequency-domain analysis of causality. Anatolia : an international journal of tourism and hospitality research, 29(3), 1-7. https://doi.org/10.1080/13032917.2017.1408025
Tyrowicz, J., Velde, L., & Svejnar, J. (2017). Effects of labor reallocation on productivity and inequality-insights from studies on transition. Journal of economic surveys, 31(3), 712-732. https://doi.org/10.1111/joes.12167
Valletta, R., & Cleary, A. (2008). Sectoral reallocation and unemployment. FRBSF Economic Letter, 2008(32), 1.
Võ Thanh, D., Nguyễn Phú, S., Phạm Hải, B., & Nguyễn Văn, S. (2010). Chuyển dịch cơ cấu lao động nông thôn và tác động của sự dịch chuyển này đến nông hộ ở thành phố cần thơ. Tạp chí khoa học = Journal of science(16b).
World Bank, G. (2017). Vietnam Enhancing Enterprise Competitiveness and SME Linkages: Lessons from International and National Experience. In: World Bank, Washington, DC.
Wu, X.-L., Liu, H.-Y., Xiang, Q.-H., Yin, Z., Zhou, R., Wang, Y.-J., Zhou, B.-Y., Wang, F., Zhao, M., & Chen, M. (2024). Double Balloon Combined with Oxytocin in Labor Induction: Analysis of Multivariate Factors Affecting the Efficacy of Cervical Ripening. International journal of women's health, 16, 1219-1227. https://doi.org/10.2147/IJWH.S460853
Ansari, M. R., Mussida, C., & Pastore, F. (2014). Note on Lilien and Modified Lilien Index. The Stata journal, 14(2), 398-406. https://doi.org/10.1177/1536867X1401400211
Autor, D. H. (2015). Why Are There Still So Many Jobs? The History and Future of Workplace Automation. The Journal of economic perspectives, 29(3), 3-30. https://doi.org/10.1257/jep.29.3.3
Bakas, D., Panagiotidis, T., & Pelloni, G. (2017). Regional and sectoral evidence of the macroeconomic effects of labor reallocation: a panel data analysis. Economic inquiry, 55(1), 501-526. https://doi.org/10.1111/ecin.12363
Barbier, E. B. (2013). Structural Change, Dualism and Economic Development: The Role of the Vulnerable Poor on Marginal Lands (Vol. 1 of 1). The World Bank. https://doi.org/10.1596/1813-9450-6456
Bates, J. M., & Granger, C. W. J. (1969). The Combination of Forecasts. OR, operational research quarterly, 20(4), 451-468. https://doi.org/10.1057/jors.1969.103
Belzil, C. (2000). Job Creation and Job Destruction, Worker Reallocation, and Wages. Journal of labor economics, 18(2), 183-203. https://doi.org/10.1086/209955
Breitung, J., & Candelon, B. (2006). Testing for short- and long-run causality: A frequency-domain approach. Journal of econometrics, 132(2), 363-378. https://doi.org/10.1016/j.jeconom.2005.02.004
Byun, Y., & Hwang, H.-s. (2015). Sectoral shifts or aggregate shocks? A new test of sectoral shifts hypothesis. Empirical economics, 49(2), 481-502. https://doi.org/10.1007/s00181-014-0878-7
Caroleo, F. E., Pastore, F., Signorelli, M., & Marelli, E. (2010). Structural Change and Regional Labour Market Imbalances in Transition. In (pp. 260-276). Palgrave Macmillan UK. https://doi.org/10.1057/9780230277403_13
Charette, M. F., & Kaufmann, B. (1987). Short-run variation in the natural rate of unemployment. Journal of macroeconomics, 9(3), 417-427. https://doi.org/10.1016/0164-0704(87)90006-1
Chen, Y., Bressler, S. L., & Ding, M. (2006). Frequency decomposition of conditional Granger causality and application to multivariate neural field potential data. Journal of neuroscience methods, 150(2), 228-237. https://doi.org/10.1016/j.jneumeth.2005.06.011
Ciner, C. (2011). Commodity prices and inflation: Testing in the frequency domain. Research in international business and finance, 25(3), 229-237. https://doi.org/10.1016/j.ribaf.2011.02.001
Demidova, O., Kolyagina, A., & Pastore, F. (2020). Marshallian vs Jacobs effects: Which is stronger? Evidence for Russia unemployment dynamics. Structural change and economic dynamics, 55, 244-258. https://doi.org/10.1016/j.strueco.2020.07.010
Dieppe, A., & Matsuoka, H. (2021). Sectoral Decomposition of Convergence in Labor Productivity: A Re-examination from a New Dataset. In: World Bank, Washington, DC.
Figura, A., & Wascher, W. (2010). The Causes and Consequences of Sectoral Reallocation: Evidence from the Early 21st Century. Business Economics, 45(1), 49-68. http://www.jstor.org.uwe.idm.oclc.org/stable/23491050
Fraser, N. (1990). Rethinking the Public Sphere: A Contribution to the Critique of Actually Existing Democracy. Social text(25/26), 56-80. https://doi.org/10.2307/466240
Garonna, P., & Sica, F. G. M. (2000). Intersectoral labour reallocations and unemployment in Italy. Labour economics, 7(6), 711-728. https://doi.org/10.1016/S0927-5371(00)00018-X
General Statistics Office. (2023). Vietnam Statistical Yearbook 2022. Statistical Publishing House.
Geweke, J. F. (1984). Measures of Conditional Linear Dependence and Feedback between Time Series. Journal of the American Statistical Association, 79(388), 907-915. https://doi.org/10.1080/01621459.1984.10477110
Gül, H., & Özer, M. (2018). Frequency domain causality analysis of tourism and economic activity in Turkey. European Journal of Tourism Research, 19, 86-97. https://doi.org/10.54055/ejtr.v19i.327
Hosoya, Y. (1991). The decomposition and measurement of the interdependency between second-order stationary processes. Probability theory and related fields, 88(4), 429-444. https://doi.org/10.1007/BF01192551
Hyatt, H. R., & McElroy, T. S. (2019). Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence. Labour (Rome, Italy), 33(4), 463-487. https://doi.org/10.1111/labr.12153
Kazamaki Ottersten, E. (1993). Sectoral shocks and structural unemployment: An empirical analysis. European Economic Review, 37(1), 115-133. https://doi.org/https://doi.org/10.1016/0014-2921(93)90073-J
Kerr, A., Wittenberg, M., & Arrow, J. (2014). Job Creation and Destruction in South Africa. The South African Journal of economics, 82(1), 1-18. https://doi.org/10.1111/saje.12031
Lilien, D. M. (1982). Sectoral shifts and cyclical unemployment. The Journal of political economy, 90(4), 777-793.
McCallum, B. T. (1975). Rational expectations and the natural rate hypothesis: some evidence for the United Kingdom. Manchester school of economic and social studies, 43(1), 56-67.
McMillan, M. S., & Rodrik, D. (2011). Globalization, Structural Change and Productivity Growth. In (pp. 17143). Cambridge: National Bureau of Economic Research, Inc.
Neelin, J. (1987). Sectoral Shifts and Canadian Unemployment. The review of economics and statistics, 69(4), 718-723. https://doi.org/10.2307/1935969
Nguyễn Minh, H. (2023). Thực nghiệm phân tích các nhân tố ảnh hưởng đến chuyển dịch cơ cấu lao động ở Việt Nam: Một tiếp cận của hồi quy không gian. Tạp chí Kinh tế và Ngân hàng châu Á(187), 30-40. https://doi.org/10.63065/ajeb.vn.2021.187.78857
Özer, M., İnal, V., Kırca, M., & Yavuz, N. Ç. (2022). The Relationship Between the Health Services Price Index and The Real Effective Exchange Rate Index in Turkey: A Frequency Domain Causality Analysis. Ekoist journal of econometrics and statistics, 26(36), 21-41. https://doi.org/10.26650/ekoist.2022.36.1108803
Ozer, M., & Kamisli, M. (2015). Frequency Domain Causality Analysis of Interactions between Financial Markets of Turkey. International business research (Toronto), 9(1), 176. https://doi.org/10.5539/ibr.v9n1p176
Phạm Thị, D., Nguyễn Thị Minh, N., & Nguyễn Thị Thu, H. (2023). Ảnh hưởng của thay đổi công nghệ đến chuyển dịch cơ cấu lao động ngành công nghiệp chế biến chế tạo ở Việt Nam. Journal of Trade Science, 40-50. https://doi.org/10.54404/JTS.2023.178V.04
Rutkowski, J. (2003). Rapid Labor Reallocation with a Stagnant Unemployment Pool: The Puzzle of the Labor Market in Lithuania. In (Vol. 1): The World Bank.
Samson, L. (1985). A study of the impact of sectoral shifts on aggregate unemployment in Canada. The Canadian journal of economics, 18(3), 518-530.
Suresh, K. G., Tiwari, A. K., Uddin, G. S., & Ahmed, A. (2018). Tourism, trade, and economic growth in India: a frequency-domain analysis of causality. Anatolia : an international journal of tourism and hospitality research, 29(3), 1-7. https://doi.org/10.1080/13032917.2017.1408025
Tyrowicz, J., Velde, L., & Svejnar, J. (2017). Effects of labor reallocation on productivity and inequality-insights from studies on transition. Journal of economic surveys, 31(3), 712-732. https://doi.org/10.1111/joes.12167
Valletta, R., & Cleary, A. (2008). Sectoral reallocation and unemployment. FRBSF Economic Letter, 2008(32), 1.
Võ Thanh, D., Nguyễn Phú, S., Phạm Hải, B., & Nguyễn Văn, S. (2010). Chuyển dịch cơ cấu lao động nông thôn và tác động của sự dịch chuyển này đến nông hộ ở thành phố cần thơ. Tạp chí khoa học = Journal of science(16b).
World Bank, G. (2017). Vietnam Enhancing Enterprise Competitiveness and SME Linkages: Lessons from International and National Experience. In: World Bank, Washington, DC.
Wu, X.-L., Liu, H.-Y., Xiang, Q.-H., Yin, Z., Zhou, R., Wang, Y.-J., Zhou, B.-Y., Wang, F., Zhao, M., & Chen, M. (2024). Double Balloon Combined with Oxytocin in Labor Induction: Analysis of Multivariate Factors Affecting the Efficacy of Cervical Ripening. International journal of women's health, 16, 1219-1227. https://doi.org/10.2147/IJWH.S460853
How to Cite
Quyet, N. (2025). Labor structural transformation and unemployment rate in Vietnam: Testing in the frequency domain. Journal of Finance - Marketing Research, 4(2ene). https://doi.org/10.52932/jfmr.v4i2.1111