The effects of multiple adverse shocks on household income in rural Vietnam
Minh-Tu Le, Hong Thi Thu NguyenPurpose
This study aims to examine the effects of multiple shocks on different types of household income in rural Vietnam, an agriculture-based developing country.
Design/methodology/approach
Utilizing panel data from Vietnam Access to Resources Household Survey spanning 2008–2018 and covering 15,182 observations, this study uses an ordinary least squares fixed-effects framework to control for observable characteristics while accounting for unobserved time- and province-invariant heterogeneity.
Findings
The findings indicate that aggregate shocks significantly reduce total household income, primarily through the contraction of non-farm earnings, as agricultural income remains relatively resilient. However, a disaggregated analysis reveals substantial heterogeneity: while natural shocks, notably typhoons, depress both agricultural and non-farm income by disrupting infrastructure, economic shocks like price volatility often trigger adaptive shifts toward non-farm self-employment. The robustness of control variables across models underscores the pivotal role of household characteristics and asset endowments. Specifically, livelihood capital, including physical assets, land, education and social networks, serves as a critical buffer, while credit access and government support further bolster household resilience.
Research limitations/implications
These findings highlight the need for targeted shock-specific policies to strengthen resilience and promote sustainable rural livelihoods beyond one-size-fits-all approaches.
Originality/value
To the best of the authors’ knowledge, this research is the first to explore the effect of diverse shocks concurrently affecting total income and its disaggregated components: agricultural, non-farm wage and self-employment earnings in rural Vietnam.