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How credit constraints affect small and medium enterprises' strategic employment decisions and employees' labour outcomes: Evidence from Vietnam 1
Author(s) -
Bach Thang,
Harvie Charles,
Le Thanh
Publication year - 2021
Publication title -
economics of transition and institutional change
Language(s) - English
Resource type - Journals
eISSN - 2577-6983
pISSN - 2577-6975
DOI - 10.1111/ecot.12280
Subject(s) - overtime , affect (linguistics) , business , labour economics , portfolio , order (exchange) , payment , economics , finance , linguistics , philosophy
This study makes use of rich firm‐level and linked firm‐employee datasets that span the 2009–2015 period in Vietnam to examine how SMEs' credit constraints affect their strategic employment decisions and employees' labour outcomes. Our results show that constrained SMEs enlarge total employment by employing relatively more temporary workers and paying their employees relatively lower wages than unconstrained borrowing firms. Meanwhile, discouraged firms, mostly informal businesses, do not behave differently from unconstrained counterparts. In order to maintain a stable employment portfolio, discouraged firms are relatively more willing to reward their employees with an overtime payment.