Heterogeneous effects of livelihood strategies on household well-being: An analysis using unconditional quantile regression with fixed effects

Tuyen Tran and Huong Vu

MPRA Paper from University Library of Munich, Germany

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 or private 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 advantage for the poor 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: Cluster analysis; fixed effects; food consumption; livelihood; unconditional quantile regression (search for similar items in EconPapers)
JEL-codes: J1 J11 O1 (search for similar items in EconPapers)
Date: 2019-12-15, Revised 2020-01-20
New Economics Papers: this item is included in nep-agr, nep-dev, nep-sea and nep-tra
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Published in Economic Analysis and Policy December.68(2020): pp. 348-362

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