The Impact of an Increase in Minimum Wage in Vietnam

Conference: The Asian Conference on Business & Public Policy (ACBPP2021)
Title: The Impact of an Increase in Minimum Wage in Vietnam
Stream: Labor and Demographic Economics
Presentation Type: Live-Stream Presentation
Lieu Hoang, Meiji University, Japan


There are few studies on the implementation and effects of a minimum wage increase on low-wage workers in Vietnam. A few studies have investigated whether or not the minimum wage has had a negative effect on low-wage employment status, to date, no work has explicitly considered the impact of an increase in the minimum wage on working hours and allowances. The main contribution of this study is to provide empirical evidence of the effects of the minimum wage increases on wages, working hours, and allowances of low-wage workers in the formal sector of Vietnam by using the different-in-different method to analyze the Vietnam Household Living Standard Surveys panel from 2014 to 2016. The estimator results show that most low-wage workers had received higher wages through the increase of the minimum wage, while the monthly wages of low-wage workers in the rural region remain unchanged. In addition, there is a significantly positive effect on working hours across all regions. Furthermore, the author also finds no evidence of the allowance effect on low-wage workers after the intervention. The main policy implication from these findings is that firstly, monitoring should promote in rural areas to ensure that the benefits from the implementation of the minimum wage reach low-wage workers. Secondly, the government should reduce the number of maximum working hours per week. At the same time, it is necessary to adopt hourly minimum wages for both full-time and part-time workers. Finally, the law remains ambiguous about the payment of allowances to workers.

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