Social security and firm performance

The case of Vietnamese SMEs

Sangheon Lee, Nina Torm

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

The relationship between job quality and firm performance has been much debated with mixed evidence, and the evidence is particularly limited in the case of small and medium enterprises (SMEs) in emerging economies. This paper investigates how social security provision as a key determining factor of formality impacts on firm performance in Vietnam. Based on enterprise census data covering all registered firms across the 63 Provinces of Vietnam from 2006 to 2011, we find that, controlling for unobserved time-invariant firm-level characteristics, firms which increase the social security coverage by 10 per cent, experience a per worker revenue gain of between 1.1–2.6 per cent and a profit gain of around 1.3–3.0 per cent, with exact estimates depending on the survival time of the firm. However, there is time-inconsistency between costs (social security contributions) and benefits (firm performance) in that the benefits may not realize in the immediate term. Thus, specific policy measures such as subsidising social insurance contributions for small firms during an initial period until the business becomes viable could potentially encourage active participation in mandatory schemes. A series of robustness check are undertaken which show that the results hold in general.
OriginalsprogEngelsk
TidsskriftInternational Labour Review
Vol/bind156
Udgave nummer2
Sider (fra-til)185-212
ISSN0020-7780
DOI
StatusUdgivet - 6 jun. 2017

Citer dette

@article{a05b71d4ac564a52b5ce30f58be89546,
title = "Social security and firm performance: The case of Vietnamese SMEs",
abstract = "This article investigates how social security provision - a key determinant of formality - impacts on small and medium-sized firm performance in Viet Nam. Based on enterprise census data covering all registered firms from 2006 to 2011, the authors find that firms which increase their social security coverage by 10 per cent experience a revenue gain of 1.4-2.0 per cent per worker and a profit gain of up to 1.8 per cent, depending on the survival time of the firm. However, given the time lag between 'investment' (in social security contributions) and returns (enhanced firm performance), specific policy measures such as initial social insurance subsidies for small firms could increase participation in mandatory schemes.",
author = "Sangheon Lee and Nina Torm",
year = "2017",
month = "6",
day = "6",
doi = "10.1111/j.1564-913X.2015.00054.x",
language = "English",
volume = "156",
pages = "185--212",
journal = "International Labour Review",
issn = "0020-7780",
publisher = "Wiley-Blackwell Publishing Ltd.",
number = "2",

}

Social security and firm performance : The case of Vietnamese SMEs. / Lee, Sangheon; Torm, Nina.

I: International Labour Review, Bind 156, Nr. 2, 06.06.2017, s. 185-212.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

TY - JOUR

T1 - Social security and firm performance

T2 - The case of Vietnamese SMEs

AU - Lee, Sangheon

AU - Torm, Nina

PY - 2017/6/6

Y1 - 2017/6/6

N2 - This article investigates how social security provision - a key determinant of formality - impacts on small and medium-sized firm performance in Viet Nam. Based on enterprise census data covering all registered firms from 2006 to 2011, the authors find that firms which increase their social security coverage by 10 per cent experience a revenue gain of 1.4-2.0 per cent per worker and a profit gain of up to 1.8 per cent, depending on the survival time of the firm. However, given the time lag between 'investment' (in social security contributions) and returns (enhanced firm performance), specific policy measures such as initial social insurance subsidies for small firms could increase participation in mandatory schemes.

AB - This article investigates how social security provision - a key determinant of formality - impacts on small and medium-sized firm performance in Viet Nam. Based on enterprise census data covering all registered firms from 2006 to 2011, the authors find that firms which increase their social security coverage by 10 per cent experience a revenue gain of 1.4-2.0 per cent per worker and a profit gain of up to 1.8 per cent, depending on the survival time of the firm. However, given the time lag between 'investment' (in social security contributions) and returns (enhanced firm performance), specific policy measures such as initial social insurance subsidies for small firms could increase participation in mandatory schemes.

U2 - 10.1111/j.1564-913X.2015.00054.x

DO - 10.1111/j.1564-913X.2015.00054.x

M3 - Journal article

VL - 156

SP - 185

EP - 212

JO - International Labour Review

JF - International Labour Review

SN - 0020-7780

IS - 2

ER -