Do Minimum Wages Affect Firms’ Labor and Capital? Evidence from Vietnam

Cuong Nguyen

MPRA Paper from University Library of Munich, Germany

Abstract: This study measures the effect of minimum wage increases on firm outcomes using fixed-effects regression and panel data from Vietnam Enterprise Censuses during 2008-2010. It is found that minimum wages reduce firms’ labor size, albeit at a small magnitude. A one percent increase in real minimum wages leads to a 0.1 percent reduction in the number of workers of firms. Firms are more likely to reduce male workers and those without social insurance. As a result, the proportion of female workers and workers with social insurance in firms increases due to minimum wages. Interestingly, under pressure of minimum wages, firms tend to increase assets, especially fixed assets, for labor substitution.

Keywords: Minimum wages; firms; impact evaluation; panel data; Vietnam (search for similar items in EconPapers)
JEL-codes: J31 L25 (search for similar items in EconPapers)
Date: 2012-06-25
New Economics Papers: this item is included in nep-dev, nep-lab, nep-lma and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:48656

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