Direct and spillover effects of social insurance reform: evidence from Vietnam

Abstract

The introduction of the 2014 Social Insurance Law is a key reform of social protection in Vietnam. This article may be the first work quantifying the effects of the law’s introduction on family welfare. The propensity score matching combined with the difference-in-differences techniques is used to reduce bias. The study indicates that the generosity of the benefits provided by the law negatively affected the work duration and earnings among couples when only the wife is insured. In contrast, their sick leaves were positively influenced. Concerning spillover effects, wives significantly responded to the change of benefits in terms of work duration and earnings. The study also attempts to identify the mechanism underlying the effects by disaggregating them by family income and couples’ ages. The results suggest that low-income couples and young couples are sensitive to the law’s introduction. The article integrates knowledge from the fields of labor economics, social welfare, and public policy.