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Do Recruitment Ties Affect Wages? An Analysis using Matched Employer–Employee Data from Vietnam

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  • Anna Folke Larsen
  • John Rand
  • Nina Torm

Abstract

This paper examines the extent to which recruitment ties affect individual wage outcomes in small and medium scale manufacturing firms. Based on a unique matched employer-employee dataset from Vietnam we find that there is a significant positive wage premium associated with obtaining a job through an informal contact, when controlling for standard determinants of wage compensation. Moreover, we show that the mechanism through which informal contacts affect wages depends on the type of recruitment tie used. The findings are robust across location, firm size categories and different worker types.
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  • Anna Folke Larsen & John Rand & Nina Torm, 2011. "Do Recruitment Ties Affect Wages? An Analysis using Matched Employer–Employee Data from Vietnam," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 541-555, August.
    • Handle: RePEc:bla:rdevec:v:15:y:2011:i:3:p:541-555
    DOI: j.1467-9361.2011.00626.x
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    References listed on IDEAS

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    1. Giles, John & Park, Albert & Cai, Fang, 2006. "Reemployment of dislocated workers in urban China: The roles of information and incentives," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 582-607, September.
    2. Calvo-Armengol, Antoni & Jackson, Matthew O., 2007. "Networks in labor markets: Wage and employment dynamics and inequality," Journal of Economic Theory, Elsevier, vol. 132(1), pages 27-46, January.
    3. Soderbom, Mans & Teal, Francis & Wambugu, Anthony, 2005. "Unobserved heterogeneity and the relation between earnings and firm size: evidence from two developing countries," Economics Letters, Elsevier, vol. 87(2), pages 153-159, May.
    4. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
    5. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710, Elsevier.
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    Citations

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    Cited by:

    1. Amadou Boly, 2015. "On the benefits of formalization: Panel evidence from Vietnam," WIDER Working Paper Series 038, World Institute for Development Economic Research (UNU-WIDER).
    2. Amadou Boly, 2015. "On the effects of formalization on taxes and wages: Panel evidence from Vietnam," WIDER Working Paper Series 042, World Institute for Development Economic Research (UNU-WIDER).
    3. Benedikter, Simon & Waibel, Gabi & Birtel, Serge & Bui, Cuong The & Tran, Be Thanh, 2013. "Local Entrepreneurship in Vietnam’s Rural Transformation. A Case Study from the Mekong Delta," MPRA Paper 49866, University Library of Munich, Germany.
    4. Neda Trifkovic, 2015. "Spillover effects of international standards: Work conditions in Vietnamese small and medium enterprises," WIDER Working Paper Series 047, World Institute for Development Economic Research (UNU-WIDER).
    5. Amadou Boly, 2015. "On the Effects of Formalization on Taxes and Wages: Panel Evidence from Vietnam," WIDER Working Paper Series wp-2015-042, World Institute for Development Economic Research (UNU-WIDER).
    6. Anh Do, Vu Phuong & Bui, Quang Tuyen, 2022. "The influence of leadership personality on profitability and firm investment in human capital: The case of Vietnamese SMEs," Finance Research Letters, Elsevier, vol. 47(PA).
    7. Huong Vu & Steven Lim & Mark Holmes & Tinh Doan, 2013. "Firm Exporting and Employee Benefits: First Evidence from Vietnam Manufacturing SMEs," Economics Bulletin, AccessEcon, vol. 33(1), pages 519-535.
    8. Vinod Mishra & Russell Smyth, 2012. "Returns to Schooling in Urban China: New Evidence Using Heteroskedasticity Restrictions to Obtain Identification Without Exclusion Restrictions," Monash Economics Working Papers 33-12, Monash University, Department of Economics.
    9. Diep Thi Ngoc Nguyen & Stephen T. T. Teo & Marcus Ho, 2018. "Development of human resource management in Vietnam: A semantic analysis," Asia Pacific Journal of Management, Springer, vol. 35(1), pages 241-284, March.
    10. Vu, Van Huong, 2012. "Does export participation affect wages and employment quality? the case of Vietnamese SMEs," MPRA Paper 38696, University Library of Munich, Germany.
    11. Benedikte Bjerge & Nina Torm & Neda Trifkovic, 2016. "Gender matters: Private sector training in Vietnamese SMEs," WIDER Working Paper Series 149, World Institute for Development Economic Research (UNU-WIDER).
    12. Amadou Boly, 2015. "On the Benefits of Formalization: Panel Evidence from Vietnam," WIDER Working Paper Series wp-2015-038, World Institute for Development Economic Research (UNU-WIDER).
    13. Rand, John & Torm, Nina, 2012. "The Benefits of Formalization: Evidence from Vietnamese Manufacturing SMEs," World Development, Elsevier, vol. 40(5), pages 983-998.
    14. Neda Trifković, 2015. "Spillover Effects of International Standards: Work Conditions in Vietnamese Small and Medium Enterprises," WIDER Working Paper Series wp-2015-047, World Institute for Development Economic Research (UNU-WIDER).
    15. Nguyen, Ngoc Thang & Vu, Van Huong, 2023. "How does adopting occupational health and safety management practices affect outcomes for employees? The case of Vietnamese SMEs," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 629-640.
    16. Christophe J. Nordman & Smriti Sharma, 2018. "Pecuniary returns to working conditions in Vietnam," WIDER Working Paper Series wp-2018-72, World Institute for Development Economic Research (UNU-WIDER).
    17. Smriti Sharma & Christophe Nordman, 2018. "Pecuniary returns to working conditions in Vietnam," WIDER Working Paper Series 72, World Institute for Development Economic Research (UNU-WIDER).
    18. Nina Torm, 2018. "Does union membership pay off?: Evidence from Vietnamese SMEs," WIDER Working Paper Series 71, World Institute for Development Economic Research (UNU-WIDER).
    19. Trifković, Neda, 2017. "Spillover Effects of International Standards: Working Conditions in the Vietnamese SMEs," World Development, Elsevier, vol. 97(C), pages 79-101.
    20. Nina Torm, 2018. "Does union membership pay off?: Evidence from Vietnamese SMEs," WIDER Working Paper Series wp-2018-71, World Institute for Development Economic Research (UNU-WIDER).
    21. Benedikte Bjerge & Nina Torm & Neda Trifković, 2016. "Gender matters: Private sector training in Vietnamese SMEs," WIDER Working Paper Series wp-2016-149, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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