Maternity benefits mandate and women's choice of work in Vietnam

Despite a sizable literature on the labor market effects of maternity leave regulation on women in developed countries, how these policies affect women's work in developing countries with a large informal sector remains poorly understood. This study examines how extending the maternity leave requirement affects women's decision to work in the informal or formal sector in Vietnam. We use a difference-in-differences approach to evaluate the 2012 Amendments to the Vietnam Labor Law, which imposes a longer maternity leave requirement than before. We find that the law increases formal employment and decreases unpaid work among women. This is driven by women switching from agricultural household work to employment in the private formal sector, especially in the manufacturing industry and among the middle-skilled occupations such as plant and machine workers, craft and related workers, as well as clerks.