Labour law reform and labour market outcomes in Vietnam

Abstract

Although there has been substantial literature on the economic impact of labour legislation in the world, the number of studies related to Vietnam is, surprisingly, very small. Our article provides the first evidence on the link between labour law and various labour market outcomes using the Vietnamese context. We examine how labour supply, earnings and social protection outcomes adjusted to labour contract reform under the 2012 Labour Code. The study uses three waves of the Vietnam Labour Force Survey to examine both medium-term and short-term impacts of the reform. Difference-in-differences and fixed-effect techniques are utilised. Overall, we find that the law change significantly affected hours worked, work absenteeism, monthly allowance and incidence of bonuses among contracted workers. However, the effects on workers’ monthly wages, overtime remuneration and other allowances, and the social protection-related outcomes were not clear in the short run.