This study provides empirical evidence on the impac t of a minimum wage increase on employment, wages, and expenditures of workers in t he formal sector who have wages below the minimum level in Vietnam. Using the diffe rence-in-differences with propensity score matching and Vietnam Household Living Standar d Surveys 2004 and 2006, the paper finds that the minimum wage increase reduced employment of low-wage workers in the formal sector. However, workers who lost for mal sector jobs were able to find jobs in the informal sector. The effect of the minimum w age increase on wages and expenditures of workers is not statistically signif icant.