Globalization and Temporary Worker Employment in Vietnam

Many concerns surround the continuing globalization of commerce and employment, including the concern that these processes have led to unstable working conditions, including more use of temporary workers. Despite these public fears, the trade literature to date has found little evidence that either exporting or importing leads to hiring a higher share of temporary workers. We analyze whether increased engagement in international trade has led to changes in the use of temporary workers in Vietnam, a country that has recently rapidly integrated into the world economy. Using data from two six-year balanced panels of the Vietnamese Enterprise Survey, covering 2010-2015 and 2017-2022, we utilize propensity score matching techniques to look for the effect of engaging in international trade on labor force composition in the manufacturing, wholesale and retail trade, and services sectors. We find during both time spans that firms newly engaging in international trade make lower use of temporary workers, both relative to non-traders, and overall, even as they maintain their overall employment and raise their wages.