Does Union Membership Pay Off? Evidence from Vietnamese SMEs

Abstract

Abstract: In the absence of adequate institutional mechanisms, trade unions can potentially promote some measure of equity and social justice for workers including for instance higher wages and other worker benefits. Yet limited data availability means little is known about the effect local firm-based trade unions may have on individual earnings in developing and transition economies. Using matched employer–employee data from the 2013 and 2015 SME surveys, this chapter examines the union wage premium among workers in Vietnamese small and medium-sized enterprises. Controlling for both firm and worker characteristics, including time-varying unobserved heterogeneity, the results show that unionized workers’ wages are 9–22 per cent higher than those of non-union workers, with the exact estimate depending on the econometric approach chosen.