Labour market effects of social insurance reform in Vietnam

Abstract

This research provides the first evidence on how labour supply and earnings may adjust to the expansion of insurance benefits under the 2014 Social Insurance Law reform. The data for this study come from the Vietnam Labour Force Surveys. Both difference-in-differences and fixed-effect models are used. The estimated results reveal negative reform effects on the work duration and earnings of both sexes and for both rural and urban areas. They also point out some definite effects on different groups of local and migrant workers. However, little evidence on sick leave impact is found. The link between social insurance status and the labour market outcomes is scrutinized as well. The findings indicate that urban workers of both sexes benefit from accessing to compulsory insurance with respect to earnings, but only rural female workers do it. Moreover, these effects come mostly from groups of non-migrant workers.