Factors Affecting Labor Demand in the Service Sector of Luang Prabang City

Abstract

This study aims to: 1) examine the general overview of employment in the service sector within Luang Prabang City; and 2) analyze the factors affecting labor demand in this sector. The research methodology utilized a survey approach by distributing questionnaires to a targeted sample group of 265 service sector business operators, including hotels-resorts, guesthouses, restaurants, entertainment venues-karaoke, and travel agencies. Data were analyzed using descriptive statistics (frequencies, percentages) and Econometric Analysis via Multiple Regression Analysis.

The findings revealed that: General Overview of Employment: The majority of respondents were male (71.7%), aged 31–40 years (65.7%), married (86.4%), held a bachelor's degree (50.9%), and operated guesthouse businesses (41.1%). Regarding employment characteristics, most businesses offered an average monthly wage of 3,000,001–5,000,000 LAK (63.4%), preferred full-time employment (84.2%), required fewer than 2 workers per year (64.5%), and identified English language proficiency as the most needed skill (40.8%). Factors Affecting Labor Demand: The multiple regression model demonstrated overall statistical significance (F = 15.625, p = 0.000$) and explained 37.9% of the variance in labor demand (Adjusted R² = 0.379$). Five factors were found to have a statistically significant positive effect (p < 0.05) on labor demand: Investment (t = 8.807, p = 0.000), which exerted the strongest influence, followed by Skills (t = 7.878, p = 0.000), Gender (t = 4.830, p = 0.000), Wages (t = 2.166, p = 0.031), and Government Policy (t = 2.048, p = 0.042). Conversely, age, marital status, education level, working hours, sector growth, and skill mismatch showed no statistically significant effect (p > 0.05).