THREE ESSAYS ON MINIMUM WAGE IN VIETNAM AND PEER EFFECT ON COMPENSATION SCHEME
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2024
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This dissertation investigates the impact of the minimum wage unification policy onhousehold income and employment in Vietnam, and the role of peer information and
communication in the individual performance. The dissertation is comprised of three essays.
The first essay focuses on the income effect of the minimum wage unification policyin Vietnam. In 2011, Vietnam government implemented a new minimum wage policy
which unified the regional minimum wage of the domestic firms and foreign establishments. However, the 2011 policy brought an unintended consequence as only formal sector workers are affected by this policy, leaving the workers in the informal sector unaffected. By utilizing the difference-in-differences approach as the identification strategy,
and the panel data of Vietnam Living Standard Survey (2010–2016), the study found that the policy increased the household income of formal sector workers by 54 percent compared with their counterpart. It also improved a composite index of quality of life by 5.1 point for formal sector workers. The income effect of the policy is heterogeneous
across demographic groups with more pronounced effect for low-skilled workers and those in the vulnerable group.
The second essay examines the employment effect of the minimum wage unificationpolicy from the firms and workers level by exploiting different data sets: Vietnam Household Survey (2008–2018), Vietnam Enterprise Census (2007–2018), and Small Medium Survey (2009–2015). The difference-in-differences is used as the identification strategy, the results show that the increase in the unique minimum wage policy leads to a substantial decrease in labor demand among the domestic firms. On average, the policy reduces the total employment by 12.8 percent among the domestic enterprises. Compared to the household firms without the registered business licenses, the typical SMEs also reduces the labor demand by 6.3 percent. The SMEs are also likely to replace the number of
regular workers, full-time workers, and workers with a formal labor contract for irregular workers and workers without formal labor contract. Due to the policy, the SMEs reduce the number of regular workers by 5.4 percent, and part-time regular workers by 11.8 percent. Firms are likely to reduce workers with formal labor contract by 6.9 percent,
while they increase workers without labor contract by 7.2 percent. Moreover, this study
also finds that remaining workers spend more time at work by extending their working
hours, which is confirmed from both firm side and worker side.
The last essay utilizes the lab experiment to investigate and decomposes the effect of peers on work performance through two specific channels: peer performance information and peer communication. The participants performed a real-effort task of adding two highest numbers from a pair of 4x4 matrices and were paid by piece rate under four different treatments. The treatments differed in whether peer performance information on a randomly matched other participant was provided, and whether the matched participants could communicate via chatbox. Overall, I found no evidence of the significant peer effects through either peer performance information or communication. However, the effects ofthese channels on the individual performance are found for some subsets of participants.
The high performers reported communication to be a distraction rather than a cooperation opportunity with their partner; their productivity is reduced in the presence of the chatbox. For females, the individual productivity is significantly reduced in the presence of both peer performance information and communication via chatbox. My experimental
results also connect to the literature on gender differences in the competitive environment
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Labor economics, Behavioral sciences, Demography, Employment effect, Household income, Minimum wage unification policy, Peer effect, Vietnam
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184 pages
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