Nguyen, Cuong (2011): Do Minimum Wage Increases Cause Inflation? Evidence from Vietnam. Published in: ASEAN Economic Bulletin , Vol. 28, No. 3 (15. December 2011)
Download (271kB) | Preview
It is often argued that minimum wage increases can lead to increased inflation. This paper examines the impact of minimum wage increases on inflation in Vietnam during the 1994-2008 period. Inflation is measured by a monthly overall Consumer Price Index (CPI) and a monthly food CPI. It is found that the minimum wage increases did not increase inflation. Since the minimum wage increases often took place one or two months before the Vietnamese New Year festivals, observed increases in monthly inflation after the minimum wage increases were caused by increased consumption demand during the New Year festivals, not by the minimum wage increases.
|Item Type:||MPRA Paper|
|Original Title:||Do Minimum Wage Increases Cause Inflation? Evidence from Vietnam|
|Keywords:||Minimum wages, inflation, CPI, Vietnam|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand
|Depositing User:||Cuong Nguyen Viet|
|Date Deposited:||18. Feb 2012 14:05|
|Last Modified:||08. Sep 2015 09:54|
Aaronson, D. (2001), “Price Pass-through and the Minimum Wage”, The Review of Economics and Statistics 83(1): 158-169.
Adedeji, O. and William O. (2004), “Inflation Dynamics in the Dominican Republic”, IMF Working Paper No. WP/04/29.
Adedeji, O., and Liu O. (2005), “Determinants of Inflation in the Islamic Republic of Iran - A Macroeconomic Analysis”, IMF Working Paper No. WP/00/127.
Bao Moi (2009), “Tăng lương tối thiểu nên mừng hay lo?”, Báo Mới, ngày 8/4/2009.
Brown, C. (1999), “Minimum Wages, Employment and the Distribution of Income,” In Handbook of Labor Economics, Vol. 3. Edited by O. Ashenfelter and D. Card. Elsevier Science, 1999: 2101-2163.
Card, D. E., and Krueger A. (1995): Myth and Measurement: The New Economics of the Minimum Wage. Princeton: Princeton University Press.
Castle, J., (2003), “Measuring Excess Demand and Its impact on Inflation”, Working Paper, Nuffield College and Oxford University.
Dan Tri (2009a), “Tăng lương sẽ không tác động nhiều đến tăng giá”, Báo Dân Trí, ngày 8/4/2009.
Dan Tri (2009b), “Mừng ít, lo nhiều chuyện tăng lương”, Báo Dân Trí, ngày 8/4/2009.
Dowrick, S., and J. Quiggin (2003). “A Survey of the Literature on Minimum Wage”, Unpublished Manuscript, Australian National University.
Duy Tuan. 2009. “Bộ trưởng LĐTB&XH: Nghe thì cứ tưởng là tăng lương...", VTC News, ngày 8/4/2009.
Fahrer, J., and Myatt J. (1991), “Inflation in Australia: Causes, Inertia And Policy” Research Discussion Paper No. 9105, Economic Research Department, Reserve Bank of Australia.
Feridun. M., and Okhari H. (2006), “Forecasting Inflation through Econometric Models: An Empirical Study on Pakistani Data”, Doğuş Üniversitesi Dergisi 7(1): 39-47.
Freeman, R. B. (1994), “Minimum Wages – Again!”, International Journal of Manpower, 15(2): 8-25. Friedman, M., (1963), Inflation: Causes and Consequences, New York: Asia Publishing House.
Frye, J., and R. J. Gordon (1981), "Government Intervention in the Inflation Process: The Econometrics of "Self-Inflicted Wounds", American Economic Review 71: 288-294.
Government of Vietnam. 2007. “Government Decree on Regional Minimum Wage for Labor in Enterprises, Collective, Farm, Households and other Organizations in Vietnam, No. 167/2007/ND-CP dated on November 16, 2007”.
Government of Vietnam. 2008a. “Government Decree on Regional Minimum Wage for Labor in Enterprises, Collective, Farm, Households and other Organizations in Vietnam, No. 110/2008/ND-CP dated on October 10, 2008”.
Government of Vietnam. 2008b. “Decree on Regional Minimum Wage for Employees in Foreign-Invested Enterprises, Foreign Institutions and International Individuals and Organisations in Vietnam, No. 111/2008/ND-CP dated on October 10, 2008”
Gunderson, M. (2005), “Minimum Wages In Canada: Theory, Evidence And Policy”, the Federal Labour Standards Review Commission, Minimum Wage No. 512.
Hamermesh, D. (1986), ‘The demand for labor in the long run’, 429–71 in Ashenfelter, O. and Layard, R. (ed.), Handbook of Labor Economics, Volume 1, North-Holland, Amsterdam.
Katz, L. F., and A. B. Krueger (1992), "The Effect of the Minimum Wage on the Fast-Food Industry," Industrial and Labor Relations Review 46: 6-21.
Lemos, S. (2004) “The Effect of the Minimum Wage on Prices”, Discussion Paper No. 1072, The Institute for the Study of Labor (IZA).
Mankiw, G. (2000), Macroeconomics, Worth Publisher, New York, the US.
Minh, H. (2008), “High Inflation Due to Money Supply”, Newspaper VnEconomy, on 27/2/2008 (in Vietnamese), available at: http://vneconomy.vn/61921P0C6/lam-phat-cao-xet-lai-nguyen-nhan-cung-tien.htm
Macdonald, J., and Aaronson D. (2000), "How Do Retail Prices React to Minimum Wage Increases?," Working Paper 2000-20, Federal Reserve Bank of Chicago.
Moffitt, R. (1991), “Program Evaluation with Nonexperimental Data”, Evaluation Review 15(3): 291-314.
Nguyen, X. T. (2007), “A Reason for High Inflation in 2007”, Newspaper VietNamNet on 28/12/2007 (in Vietnamese), available at:http://vietnamnet.vn/kinhte/2007/12/761574/
Nguyen, C. (2009), “The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam”, MPRA Paper 36751, University Library of Munich, Germany.
Sellekaerts, B. (1981), "Impact of Minimum Wage Legislation on Wage and Price Inflation", Report of the Minimum Wage Paper Commission 6: 1-17.
Tran, T. H., Tran, T., Le, D., Nguyen, H. (2006), “Determination of Minimum Wages in Market Economy in Vietnam”, Report for Ministry of Labor, Invalid, and Social Affairs of Vietnam.
Vneconomy (2003), “Increased minimum wage can increase prices slightly”, Vietnam Economy Newspapers, February 16, 2003.
Vu Thieu (2006), “Minimum wage in the world and lesion learned for Vietnam”, Report prepared for Ministry of Labor, Invalid and Social Affairs, 2006.
Wooldridge, J. M. (2002), Econometric Analysis of Cross Section and Panel Data, The MIT Press, Cambridge, Massachusetts.
World Bank (2008), Vietnam Development Report 2008: Social Protection, World Bank, Vietnam.