Attribution of Changes in Vietnam’s Labor Productivity

Abstract

This study examines the change in labor productivity in Vietnam by means of a Fisher index decomposition and attribution analysis. The results can be summarized as follows. First, the aggregate labor productivity is decomposed into pure labor productivity and structural change from 2007 to 2019. All of the aggregate labor productivity, pure labor productivity, structural change, and interaction terms have increased by 69.83%, 36.74%, 24.20%, and 8.89%, respectively. Second, the percentage change in labor productivity is attributed to 20 sub-industries by pure labor productivity and structural change. The sum of the multi-period attribution of pure labor productivity and structural change shows that the manufacturing industry positively dominates (15.84%) and plays a key role in economic development. The positive pure labor productivity and structural change in the manufacturing industry imply that the structural bonus hypothesis does hold in the industry. The findings also indicate that pure labor productivity, especially in the service industry, should be improved to sustain economic growth.