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The pro-poor impact of non-crop livelihood activities in rural Vietnam: A panel data quantile regression analysis

Tuyen Tran and Huong Van Vu

Economic Analysis and Policy, 2020, vol. 68, issue C, 348-362

Abstract: Using a household panel dataset for the 2008–2016 period, we analyze the heterogeneous effects of livelihood change on household well-being in rural Vietnam. We use an unconditional quantile regression (UQR) model with fixed effects to control for unobservable time-invariant household characteristics. We find that when a fixed-effects estimator is employed, households switching from a crop livelihood to any non-crop livelihood (e.g., livestock, wage-earning, nonfarm, private or transfer livelihoods) increase their per capita income and food consumption. However, the results from the UQR with fixed effects reveal a significant variation in the effect of such a switch in livelihood across various quantiles of well-being distribution, with a larger effect for poorer households. The income effect, however, tends to decline with higher quantiles and even turns negative with a switch to a wage-earning or public transfer livelihood for the better off. Notably, our study confirms the pro-poor impact of changing livelihood from crop to non-crop activities in rural Vietnam. Our research results also suggest that a mean regression approach that often assumes a homogeneous/mean effect of livelihoods on well-being, may miss some heterogeneity that is useful to researchers and policy makers.

Keywords: Crop livelihood; Fixed effects; Pro-poor; Income; Unconditional quantile regression (search for similar items in EconPapers)
JEL-codes: C21 C23 C31 O12 P Q12 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.eap.2020.10.005

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