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The Impact of Minimum Wages on Employment, Wages and Welfare: The Case of Vietnam

Author

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  • Del Carpio, Ximena
  • Nguyen, Cuong
  • Nguyen, Ha
  • Wang, Choon

Abstract

The paper investigates the impact of recent minimum wage changes on wages, employment and household welfare in Vietnam. It finds that minimum wage changes reduce the total number of wage workers (especially in domestic firms) and increases the incidence of self-employment. The number of wage workers declines because many wage workers with informal contracts lose their jobs, but only a fraction of the job loss is absorbed by the creation of self-employment or formal jobs. In addition, minimum wages help raise the average wages of workers who keep their jobs. In terms of welfare, an increase in minimum wage reduces poverty and raises household income and consumption expenditure, most importantly in education-related expenditures.

Suggested Citation

  • Del Carpio, Ximena & Nguyen, Cuong & Nguyen, Ha & Wang, Choon, 2013. "The Impact of Minimum Wages on Employment, Wages and Welfare: The Case of Vietnam," MPRA Paper 83677, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:83677
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    File URL: https://mpra.ub.uni-muenchen.de/83677/1/MPRA_paper_83677.pdf
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    References listed on IDEAS

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    Cited by:

    1. World Bank, 2013. "Minimum Wage Policy : Lessons with a Focus on the ASEAN Region," World Bank Publications - Reports 16687, The World Bank Group.
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    3. Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix, 2017. "Minimum Wages in Sub-Saharan Africa: A Primer," The World Bank Research Observer, World Bank, vol. 32(1), pages 21-74.
    4. Vu, Khoa & Glewwe, Paul, 2022. "Maternity benefits mandate and women’s choice of work in Vietnam," World Development, Elsevier, vol. 158(C).
    5. Lee Yong-Woo & Lee Yong-Ju, 2019. "The Effects of Copayments on Healthcare Utilization in Korea’s Medical Aid Program," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(3), pages 1-17, July.
    6. Asian Bank, 2018. "Asian Development Outlook (ADO) 2018: How Technology Affects Jobs," Working Papers id:12717, eSocialSciences.

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    More about this item

    Keywords

    Minimum wages; firms; impact evaluation; panel data; Vietnam;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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