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Keywords:

  • minimum wages;
  • firm profitability;
  • difference-in-differences;
  • propensity score matching;
  • Vietnam

Abstract

This paper measures the impact of a minimum wage increase in 2005 on profitability of private firms in Vietnam using a difference-in-differences with propensity score matching method. Data used for this analysis are from Vietnam Enterprise Censuses in 2004 and 2006. It is found that the impact estimate of the minimum wage increase in 2005 from 290 to 350 thousand VND on firms’ profit margins is very small and negative and not statistically significant. Copyright © 2013 John Wiley & Sons, Ltd.