World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 107
World Food Policy
From the panel years of 2007,
2008, and 2010, poverty dynamics can
be classified into eight categories of (1)
being nonpoor in all periods, (2a) poor-−
poor−nonpoor, (2b) poor−nonpoor−
nonpoor, (3a) nonpoor−poor−poor,
(3b) nonpoor−nonpoor−poor, (4a)
nonpoor−poor−nonpoor, (4b) poor−
nonpoor−poor, and (5) being poor in
all periods. These eight categories can
be grouped into five mutually exclusive
outcomes: (1) J = 4 and P(Y = 0) is the
(3) pij = P(Yi = j ) =
e
β j xi
4
1+ ∑ e
β k xi
household’s probability of being nonpoor
in all periods, P(Y = 1) is the probability
of rising (includes categories (2a) and
(2b)), P(Y =2) is the probability of falling
(includes categories (3a) and (3b)), and
P(Y =3) is the probability of churning
(includes categories (4a) and (4b)), and
P(Y =4) is the probability of being poor
in all periods. Thus, the specific model
applied in this study when standardizing
β0 = 0 is expressed as
(
k =1
∂pij
4
⎛
= pij ⎜ β j − ∑ pik β k
∂xi
k =1
⎝
1
4
1+ ∑ e
k =1
The (MNL) model will estimate
coefficients for four categories relative
to the omitted category (being nonpoor
in all periods). In order the relationship
to make more sense, the results of
the (MNL) model are used to predict
marginal effects, which measure the
conditional probabilities of a change in
the regressors on the outcome and are
estimated as
(4)
)
, for j = 1, 2, 3, 4 and pi 0 = P Yi = 0 =
⎞
⎟ .
⎠
β k xi
.
A marginal effect shows the
impact of a change in an explanatory
variable on the probability of a household
being in each of the five categories.
To investigate the dynamics
of poverty in Vietnam, I hypothesize
that a household’s poverty transitions
depend on the diversity of income
sources, its characteristics, and its head’s
characteristics.
The measurement of poverty
dynamics refers to equivalence scaled2
income and a Vietnam national poverty
line estimated by the Ministry of Labour,
Invalids and Social Affairs (MOLISA),
which was approximately $1.213 a day
Equivalence scaled income is calculated by dividing a household’s total income by its equivalence size
using OECD (1982) scale.
2
This poverty threshold is measured in purchasing power parity (PPP) price estimated in 2005.
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