Factors Affecting Labor Productivity in Manufacturing Enterprises in Vinh Phuc Province, Vietnam

Abstract

Purpose: To examine the factors affecting the labor productivity of manufacturing firms in Vinh Phuc Province, Vietnam.   Theoretical framework: The role of labor productivity is important to the economy. Internal factors such as policies, institutions, and factors of the enterprise itself and external factors such as foreign direct investment (FDI) also have positive/negative impacts on labor productivity.   Design/methodology/approach: This study collects a set of enterprise survey data conducted annually by the Vietnam General Statistics Office from 2011 to 2020 and PCI data collected from the Vietnam Confederation of Commerce and Industry (VCCI). The generalized method of moment (GMM) estimated parameters in the models.   Findings: Internal factors such as Macro factors, PCI, Lag of labor, Technical equipment, Wage labor, Age of enterprises, and TFP have positive effects on labor productivity and external factors such as FDI have negative horizontal effects and positive vertical effects on the labor productivity of enterprises.   Research, Practical & Social Implications: The solutions include institutional reform, ensuring macroeconomic stability, increasing attraction, using effective (FDI) resources, enterprises improving operational efficiency, and investing enterprise resources in technology and labor training to maximize the benefits of technological advancements.   Originality/value: The research results will be referenced in the implementation of policies in Vietnam as well as in Vinh Phuc Province.