Very little is known about the extent to which wage and employment offsetting
behaviours change by firm size to mitigate the detrimental effects of minimum wage regulation.
Do micro establishments react more aggressively to minimum wage shocks compared to small and
medium establishments? To answer this question, this paper examines the impact of minimum
wage hikes on employment and wages in Viet Nam’s micro enterprises, and small and medium
enterprises (SMEs), respectively. In particular, I exploit the differences in the rates of increases in
minimum wages across minimum wage regions to identify the effects of minimum wage changes.
The findings indicate that minimum wage has greater employment effects on SMEs, but alters
employment structure of micro firms.