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Impact of minimum wage on household income: Evidence from Vietnam’s unification policy

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  • Le, Binh

Abstract

Using six waves of the Vietnam Household Living Standard Survey over 2010–2020, covering 34,958 households and 82,762 individuals, this paper examines the association between the 2011 minimum-wage unification policy and the household income gap between formal (treated) and informal (control) sector workers. Employing a difference-in-differences framework as the main identification strategy and propensity score matching (PSM) as a robustness check, the results indicate that the minimum-wage unification policy is associated with a 6.2% increase in household income among formal-sector workers relative to their informal counterparts (p < .001). The effects are more pronounced among women, young adults, non-Kinh populations, low-skilled workers, and households in the lower tail of the income distribution. Mechanism analysis suggests that while the policy benefits workers in both sectors, faster wage growth in the formal sector is associated with a widening income gap. Overall, the findings suggest that strong enforcement of the policy is linked to increased household income disparities between formal and informal sectors.

Suggested Citation

  • Le, Binh, 2026. "Impact of minimum wage on household income: Evidence from Vietnam’s unification policy," Economic Analysis and Policy, Elsevier, vol. 91(C), pages 618-631.
    • Handle: RePEc:eee:ecanpo:v:91:y:2026:i:c:p:618-631
    DOI: 10.1016/j.eap.2026.03.016
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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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