Author(s): Ha Quynh Hoa, Nguyen Viet Hung, Phung Mai Lan, To Trung Thanh, Luu Thi Phuong, Truong Nhu Hieu
The study focuses on measuring the efficiency of labor reallocation in aggregate productivity growth by using dynamic decomposition and examining the factors affecting the efficiency of the labor reallocation in Vietnam's manufacturing. Using firm-level data in the manufacturing industry for the 2005-2019 period, the study reveals that most changes in aggregate labor productivity and aggregate TFP are due to a pure within-firm productivity. The labor reallocation contributes 46.2% to aggregate labor productivity and 2.7% to aggregate TFP. Based on the spatial econometric model approach, using province-level data, the paper evaluates direct and indirect effects of factors on efficiency of labor reallocation. The results indicate that the increase in the number of employees in high and medium-high-tech enterprises is creating a positive effect on labor reallocation efficiency while that of the medium and low-tech industry shows a negative effect. In the period of study, it is found that specialization did not improve the efficiency of labor reallocation, but diversification created a positive impact. Diversification improved the efficiency of the labor reallocation within the province and spread positive effects to the neighbor ones. FDI firms have created positive effects on the efficiency of the labor reallocation within the provinces, but not neighbor provinces.