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Services imports and labour in Viet Nam

Author

Listed:
  • Alexander Jaax

    (OECD)

  • Louise Johannesson

    (OECD)

  • Thi Xuan Thu Nguyen

    (Diplomatic Academy of Viet Nam)

Abstract

This paper draws on detailed firm-level and worker-level information to explore the link between services imports and employment dynamics in the case of Viet Nam. The econometric analysis consists of two parts. First, data covering formal firms are exploited to investigate the relationship between sector-level services import intensity and firm-level employment and firm-level average wages. The second part is conducted at the level of workers and also covers informal workers. The results show that sector-level services import intensity positively affects firm-level average wages of Vietnamese formal services firms, whereas a small negative effect on firm-level employment is observed. For manufacturing firms, there is no conclusive evidence regarding the association between services import intensity and firm-level employment. The worker-level analysis identifies a positive wage effect of occupation-level exposure to services imports on domestic workers in foreign-owned businesses in all sectors. The results also suggest that higher skilled workers might be more likely to benefit from services imports. This paper provides support for an approach that combines an emphasis on lowering firms’ costs of sourcing foreign services inputs with efforts to strengthen SMEs’ capabilities and improve workers’ skills.

Suggested Citation

  • Alexander Jaax & Louise Johannesson & Thi Xuan Thu Nguyen, 2020. "Services imports and labour in Viet Nam," OECD Trade Policy Papers 241, OECD Publishing.
    • Handle: RePEc:oec:traaab:241-en
    DOI: 10.1787/78401207-en
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    More about this item

    Keywords

    employment; individual and firm-level data; trade; wages; worker heterogeneity;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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