World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 108

Income Diversity and Poverty Transitions: Evidence from Vietnam

by 2008. Similarly, a household’s income
is used to measure the diversity from
agricultural sources to nonagricultural
sources.

Explanatory variables include
income diversity and household asset
levels. Income diversity is measured
by an increase in the share of income
from nonagricultural activities to the
household’s total income over a period.
A household’s asset is measured by
household and individual characteristics
as proxies for human capital; land use and
asset index represent physical assets. Also,
a household’s location will be a proxy for
the household’s access to markets.

Household characteristics are
measured by a household’s size that
counts the number of the household’s
member.
The
household’s
head
characteristics include gender, age,
ethnicity, and education attainment. In
addition, a household’s physical assets
include quantitative and qualitative
items. The quantitative assessment
concerns whether the household has: a
motorbike, a bike, a television, a radio,
a CD player, an electric fan, an electric
rice cooker, a fridge, and a mattress.
The quality assessment includes: having
improved flooring condition, having
improved housing condition, having
access to improved sanitation facility,
and using improved cooking fuel.3 House
size is also included, measured in square
meters. These items are included in the

estimation of the asset index via principal
component analysis. Among the items,
motorbike plays an important role (with
a weight of 24 percent), and then comes
television (10 percent), while the other
items are less important, each of which
contributes less than 10 percent to the
asset index (see Table A.1).

The location of a household
includes a dummy variable indicating
provincial location. DL is located in
the highlands with basalt soil, which
is suitable for high-value crops such as
coffee, pepper, cashew, and rubber. The
population density in the province is also
low, allowing households to possess more
land than households in the other two
provinces. In contrast, HT and TTH are
in the coastal area and are frequently hit
by storms and floods. These differences
make it reasonable to treat DL as a
reference.

Income Diversity and Poverty
Transitions in Vietnam
The Patterns of Income Diversification

T

he main income sources of many
households were those from
agricultural activities. On average,
agricultural activities accounted for 40
percent of a household’s total income;
this share was 50 percent in DL as many
households there grew high-value crops
such as coffee and pepper.

Reference categories: The floor is made of cement or ceramic. The main walls are made of concrete
and the roof is made of slates or concrete. The household uses flushed toilet. The household cooks
with gas or electricity.
3

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