Investments in worker health and production: Evidence from Vietnam

Abstract

In manufacturing industries, occupational health and safety measures ensure better working conditions for employees, which may influence their productivity. We study the impact of investments undertaken by small and medium enterprises in Vietnam in mitigating indoor pollution (including air quality improvements, heat and noise protection as well as lighting) on firm‐level gross output and value added. We find that the amount invested by the firm in health has a significant positive effect on both outcomes. Given historically poor working conditions in Vietnam, policy implications relate to incentivizing and enabling firms to undertake such investments, on both moral and economic grounds. © 2021 European Bank for Reconstruction and Development