Estimation of family labor supply: Evidence from the MeKong River Delta in Viet Nam. Can Tho University Journal of Science

Abstract

This article explores the data of 1,860 families living in the Mekong River Delta (MRD) region from the Viet Nam Household Living Standards Survey 2008 (called VHLSS 2008) to learn about their familial labor allocation in responding to changes of market wage. Theoretically, wage – one of the key factors influencing changes of family labor supply– is used to estimate a level of the shadow wage which is an exogenous factor in the labor supply function. Based on the survey data of 1,860 MRD families, findings showed that family labor supply is significantly sensitive to changes of both shadow wage and non-labor income. Family labor supply is being of a forward bending curve, while family tended to reduce its labor supply as a response of an increase of the non-labor income. Additionally, plot size was closely related to labor supply within a family. Consequently, results also indicate that IV estimation methodology is substantial to estimate impacts of changes of the economic opportunity (mainly wage) on family labor supply.