Does Gender Influence the Provision of Fringe Benefits? Evidence From Vietnamese SMEs

Abstract

This contribution studies the provision of fringe benefits using a unique survey of small and medium-sized enterprises (SMEs) in Vietnam. Analysis of the survey reveals that women who own SMEs are more likely than men who own similar firms to provide employees with fringe benefits such as annual leave, social benefits, and health insurance. This gender effect exists especially with regard to mandatory social insurance and is robust to the inclusion of standard determinants of wage compensation. The study also explores whether this finding is linked to gender differences in social networks and workforce structure, worker recruitment mechanisms, and the degree of unionization. However, these factors cannot fully account for the observed differences in fringe benefits along the “gender of owner” dimension. There remains a sizable and unexplained fringe benefits premium paid to employees in women-owned firms.

Keywords:

• Gender
• fringe benefits
• Vietnam
• JEL Codes: J16, J31, O53

ACKNOWLEDGMENTS

The authors are grateful for productive and stimulating collaboration with the survey teams from the Vietnamese Institute of Labor Science and Social Affairs (ILSSA) and staff at Central Institute for Economic Management (CIEM). Financial support from Danida is appreciated. The usual caveats apply.

Notes

¹ The World Bank SME department currently operates with three groups of SMEs: micro-, small-, and medium-scale firms. Micro-enterprises have between 1 and 10 employees, small-scale enterprises between 11 and 50 employees, and medium-size enterprises between 51 and 300 employees. The Vietnamese government broadly accepts these definitions (see Government of Vietnam [2001]). In what follows, we apply these definitions.

² Additional information on rules on fringe benefits can be found in the Vietnamese Labor Code (see Government of Vietnam [2007]) and in John Rand, Finn Tarp, Tran Tien Cuong, and Nguyen Thanh Tam (2008).

³ David Berstein (2002) shows that race/ethnicity is also important for the provision of fringe benefits in the US. As most firm owners in our sample are within the same ethnic group (Kinh), we do not include this variable in the analysis.

⁴ To test the difference between HH and non-HH enterprises formally, we allowed for an intercept difference between HH and non-HH firms by including an HH firm dummy and all HH interaction terms and tested joint significance of the interaction terms only, resulting in a rejection of the null. Interaction terms turned out statistically significant along the following dimensions: (i) firm size, (ii) average wage per employee, and (iii) average worker skill.