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The Impact of Minimum Wages on Employment: Evidence From a Lower Middle‐Income Country

Year: 2024

Type: article

Abstract: In this study, we examine the impact of minimum wages in Vietnam using individual‐level data from the annual Labor Force Surveys (2012–20). 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 wage earnings. 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 earnings. A 1% increase in the minimum wage leads to a 0.32% increase in hourly earnings.

Source: The Developing Economies

DOI: 10.1111/deve.12419

Author: Cuong Viet Nguyen

Institutions: Vietnam National University, Hanoi, Thang Long University, VNU International School

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty

Open Access status: bronze

Funder: International Labour Organization