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The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam

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  • Nguyen Viet, Cuong

Abstract

This study provides empirical evidence on the impact of a minimum wage increase on employment, wages, and expenditures of workers in the formal sector who have wages below the minimum level in Vietnam. Using the difference-in-differences with propensity score matching and Vietnam Household Living Standard Surveys 2004 and 2006, the paper finds that the minimum wage increase reduced employment of low-wage workers in the formal sector. However, workers who lost formal sector jobs were able to find jobs in the informal sector. The effect of the minimum wage increase on wages and expenditures of workers is not statistically significant.

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File URL: http://mpra.ub.uni-muenchen.de/36751/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36751.

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Date of creation: 20 Dec 2010
Date of revision: 15 Aug 2011
Handle: RePEc:pra:mprapa:36751

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Related research

Keywords: Minimum wage; employment; income; Vietnam; difference-in-differences; propensity score matching;

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References

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  1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September.
  2. David Card, 1992. "Do minimum wages reduce employment? A case study of California, 1987û1989," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(1), pages 38-54, October.
  3. Ann Harrison & Jason Scorse, 2004. "Moving Up or Moving Out? Anti-Sweatshop Activists and Labor Market Outcomes," NBER Working Papers 10492, National Bureau of Economic Research, Inc.
  4. Martφn Rama, 2001. "The Consequences of doubling the minimum wage: The case of Indonesia," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(4), pages 864-881, July.
  5. Dickens, Richard & Machin, Stephen & Manning, Alan, 1999. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 1-22, January.
  6. Neumark, David & Wascher, William, 2007. "Minimum Wages and Employment," IZA Discussion Papers 2570, Institute for the Study of Labor (IZA).
  7. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1998. "Minimum Wages and Employment in France and the United States," Papiers du Laboratoire de Microéconomie Appliquée 1998-12, Université Panthéon-Sorbonne (Paris 1).
  8. Sara Lemos, 2004. "Minimum Wage Policy and Employment Effects: Evidence from Brazil," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  9. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  10. Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November.
  11. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
  12. Bazen, Stephen, 2000. "The Impact of the Regulation of Low Wages on Inequality and Labour-Market Adjustment: A Comparative Analysis," Oxford Review of Economic Policy, Oxford University Press, vol. 16(1), pages 57-69, Spring.
  13. Neumark, David & Wascher, William, 2003. "Minimum wages and skill acquisition: another look at schooling effects," Economics of Education Review, Elsevier, vol. 22(1), pages 1-10, February.
  14. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
  15. David Neumark & William Wascher, 2002. "State-Level Estimates of Minimum Wage Effects: New Evidence and Interpretations from Disequilibrium Methods," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 35-62.
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  17. repec:fth:coluec:9899-01 is not listed on IDEAS
  18. Burkhauser, Richard V & Couch, Kenneth A & Wittenburg, David C, 2000. "A Reassessment of the New Economics of the Minimum Wage Literature with Monthly Data from the Current Population Survey," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 653-80, October.
  19. Richard Dickens & Stephen Machin & Alan Manning & David Metcalf & Jonathan Wadsworth & S Woodland, 1994. "The Effect of Minimum Wages on UK Agriculture," CEP Discussion Papers dp0204, Centre for Economic Performance, LSE.
  20. Michele Campolieti & Tony Fang & Morley Gunderson, 2005. "Minimum wage impacts on youth employment transitions, 1993-1999," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 81-104, February.
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Cited by:
  1. Del Carpio, Ximena & Messina, Julián & Sanz-de-Galdeano, Anna, 2014. "Minimum Wage: Does It Improve Welfare in Thailand?," IZA Discussion Papers 7911, Institute for the Study of Labor (IZA).
  2. Nguyen Viet Cuong, 2014. "Do Minimum Wages Affect Firms’ Labor and Capital? Evidence from Vietnam," Working Papers 2014-179, Department of Research, Ipag Business School.
  3. Nguyen, Cuong, 2011. "Do Minimum Wage Increases Cause Inflation? Evidence from Vietnam," MPRA Paper 36750, University Library of Munich, Germany.

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