Abstract
This study examines the impact of digital transformation and personal characteristics on income disparities between formal and informal workers in Vietnam. Such disparities mainly arise from differences in benefits, qualifications, career opportunities, and access to digital technologies. Using data from the Labor Force Survey (LFS) together with the provincial ICT index, the study applies quantile regression and the Machado–Mata decomposition method. The results show that education, gender, and digital skills significantly influence income, while the effect of provincial ICT indicators remains limited, especially for informal workers. This indicates that Vietnam’s digital transformation has so far focused more on infrastructure, with less direct impact on business activities or job accessibility. In addition, the findings reveal that formal workers earn more at lower income levels, but at higher quantiles, informal workers perform better due to their flexibility and market adaptability. The novelty of this study lies in combining micro labor data with a provincial digital transformation index to analyze income gaps between the two labor sectors. It provides empirical evidence of the limited effectiveness of current digital transformation efforts and suggests several policy directions to improve skills, reduce inequality, and promote more inclusive digital development.