The Impact of Minimum Wages on Employment: Evidence from a Lower Middle-Income Country

Cuong Nguyen

No 1253, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: In this study, we examine the impact of minimum wages in Vietnam using individual-level data from the 2012-2020 annual Labor Force Surveys. During this period, the average real minimum wage increased by around 4% per year. Overall, we do not find significant effects from minimum wages on employment and monthly wages. However, we find a considerable negative effect on workers' total working hours. Working hours per week are reduced by 0.38% for a 1% increase in the minimum wage. Since total wages remain unchanged, a reduction in working hours results in an increase in hourly income. A 1% increase in the minimum wage leads to a 0.32% increase in hourly wages. Interestingly, for workers earning below minimum wage, we find a positive effect from minimum wages on their monthly income. A 1% increase in the minimum wage increases monthly income of workers earning below minimum wage by 0.83%.

Keywords: Minimum wages; employment; labor productivity; impact evaluation; Vietnam (search for similar items in EconPapers)
JEL-codes: J31 J50 O12 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-sea and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:1253

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