World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 114

Income Diversity and Poverty Transitions: Evidence from Vietnam

Finally, yet importantly, the
patterns of and the changes in income
sources also differ across population
subgroups. On average, a nonpoor
household had an income level of closed
to VND 35 million by 2007 and it rose
to slightly higher than VND 40 million
by 2010. However, its income from
agricultural activities stayed at almost
the same level of VND 11 million over
the same period making a decrease in the
share of agricultural activities in the total
income. Apparently, households of other
groups had a lower income level than the
nonpoor ones. By 2007, the incomes of a
rising household, a falling one, a churning
one, and a poor one were VND 15 million,
VND 15 million, VND 14 million, and
VND 11 million, respectively. The share of
income from agricultural activities to the
total household income of household in
these groups are significantly higher than
this share for nonpoor households, and
interestingly the share for the former ones
rose over the period, which implies that
income from nonagricultural activities of
these households increased slower than
income from agricultural activities. This
was the result of the economic recession
in Vietnam started late 2008, causing loss
in job, wage cut, etc. and hence affects
negatively on remittance, and income
from off-farm employment.
Drivers of Poverty Transitions

The marginal effects from the
MLN regression show that the increase in
the share of income from nonagricultural
activities to total household income has
an effect on the transitions of poverty.
It had a positive relationship with the
probability of rising out of poverty,

negative relationship with the probability
of falling into poverty as well as with
the probability of staying poor (see
Table 4). These relationships imply that
the transitions toward nonagricultural
income sources are good for the
household’s well-being. Yet, not all the
marginal effects are of high levels of
significance because the diversity of
income sources is not always successful.

Households in Vietnam have a
tendency to have smaller sizes owing
to the lower birth rate, the increasing
migration, and the inclination of living in
two generation households. Nevertheless,
poor households usually have a larger
size because they have more children,
less chances to migrate, and having
limited resources that prevent them from
separating into smaller households. The
marginal effects show that households
of a larger size and higher dependency
ratio have a lower probability of staying
nonpoor and a higher probability of being
poor in at least one period (see Table 4).

Female-headed households are
typically home to more members than
male-headed households, and the
formers usually have less bread winners
than the later, which consequently makes
them have higher levels of vulnerability
to poverty than their counterparts. In
addition, there was no evidence of the
difference between the vulnerability to
poverty across household sungroups
as classified by the head’s age. In fact,
the poverty dynamics are determined
more by the change in the household’s
livelihood rather than the characteristics
of the head (Carter and Barrett 2006),
and findings from previous studies do
not show the importance of the head’s
age (Kedir and McKay 2005; Bhide and

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