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. 1 107