Thesis Public Defense | VNP30 - Lê Thị Quỳnh Nga

Exploring the impact of labor market conditions on business development in Vietnam: a provincial level analysis

Student: Lê Thị Quỳnh Nga, VNP-30

Supervisor: Prof. Almas Heshmati

Abstract:

Labor market conditions (LMC) play a crucial role in business development (BD) and provincial income generation, yet their combined interaction at the provincial level remains insufficiently examined in Vietnam. This thesis investigates how LMC are associated with BD and provincial income across 63 provinces during 2018–2023. Using provincial data from the Vietnam General Statistics Office (GSO) and the Provincial Competitiveness Index (PCI), the study applies a simultaneous equation framework estimated by Three-Stage Least Squares (3SLS) method to account for the interdependence between enterprise density and gross regional domestic product (GRDP) per capita. The findings indicate that LMC, together with institutional and provincial economic indicators (PEI), are closely related to enterprise activity and income differences across provinces. A nonlinear and bidirectional relationship is observed between BD and GRDP per capita, with diminishing marginal effects at higher levels of enterprise density and income. Significant regional disparities is likely to persist, as economic activity is concentrated in a small group of advantaged provinces while less-developed regions lag behind. These results highlight the importance of balanced and inclusive regional planning, improved labor allocation, streamlined administrative procedures, and stronger institutional quality to support sustainable BD and reduced provincial development gaps in Vietnam.

Keywords: Business development; Labor market conditions; Provincial economic indicators; Provincial Competitiveness Index; GRDP per capita; Vietnamese provinces

JEL Classification Codes: J21; J24; L26; R11; C33