Luận văn thạc sĩ UEH households earned income in vietnam, evidence from VHLSS 2008

UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES

HO CHI MINH CITY THE HAGUE

VIETNAM THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

HOUSEHOLDS’ EARNED INCOME IN

VIETNAM: EVIDENCE FROM VHLSS 2008

BY

TRƯƠNG NGỌC QUANG

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, JANUARY 2013

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UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES

HO CHI MINH CITY THE HAGUE

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

HOUSEHOLDS’ EARNED INCOME IN

VIETNAM: EVIDENCE FROM VHLSS 2008

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By

TRƯƠNG NGỌC QUANG

Academic Supervisor

Dr. PHẠM KHÁNH NAM

HO CHI MINH CITY, January 2013

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ACKNOWLEDGEMENT

First of all, I would like to thank you to all professors in the teaching board of

MDE program, who have helped me accumulate valuable knowledge to complete

this study. I would like to express my thanks to Mr. Phung Thanh Binh, Mr. Nguyen

Khanh Duy, Mr. Truong Thanh Vu, and all other scholars participated for arranging

and conducting training on the quantitative research with STATA & VHLSS 2008.

Also, I would like to say thank you to Mr. Nguyen Van Phuong for his earlier

comments on my paper.

I would like to express my gratitude to Prof. Dr. Nguyen Trong Hoai, who has

inspired me to greater effort of thesis writing.

I would like to express my sincere appreciation to Dr. Pham Khanh Nam, my

current supervisor, who provides me directive suggestions, helpful advices and

precious supports during my thesis writing.

To all my dear friends of MDE class 16, who give me sincere encouragement

and support, I would like to express my heartfelt thankfulness.

Finally, I would like to express my deeply appreciation to my dear parents, to

my wife - also my best friend, and my family for their spiritual and physical

supports. In particular, I dedicate this thesis to my grand-father, who used to be a

teacher. His noble example is still inspiring me to further learning and going

forward in my life.

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1

ABSTRACT

The most considerable element of households’ income structure on average is

earned income which is one of the main drivers to improve the living standard of

most Vietnamese households in recent years. However, there is an increasing

tendency of income inequality and living standards’ difference between regions,

rural and urban areas as well as between the richest and poorest households. This

paper contributes to the understanding of the effects of Region-level characteristics,

Community-level characteristics and Household and individual characteristics on

household’s earned income. The determinants of earned income are considered at

household, commune and regional levels. While wage employment still constitutes

the backbone of the urban economy, non-farm activities and income diversification

are increasingly significant for rural households. It is recognized that households’

physical capital (housing), human capital (education), and local infrastructure are

significant determinants in increasing their earned income.

Key Words: earned income; household; semi-log model; poverty; inequality,

Vietnam.

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2

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION ............................................................................ 7

1.1 Problem statement ..................................................................................... 7

1.2 Research objectives and research questions.............................................. 9

1.3 Scope of study ......................................................................................... 10

CHAPTER 2: LITERATURE REVIEW ............................................................... 11

2.1 Definition and concept review ................................................................ 11

2.2 Review of framework for livelihood and income analysis ..................... 19

2.3 Understanding the determinants of incomeError! Bookmark not defined.4

CHAPTER 3: RESEARCH METHODOLOGY ................................................... 30

3.1 The data ................................................................................................... 30

3.2 Methodology ........................................................................................... 30

3.2 Specification of variables........................................................................ 32

CHAPTER 4: RESULTS ....................................................................................... 38

4.1 Overview of earned income in Vietnam................................................. 38

4.2 Regression Results .................................................................................. 48

CHAPTER 5: CONCLUSION, RECOMMENDATION AND LIMITATIONError!

Bookmark not defined.8

5.1 Conclusion and Recommendation .......................................................... 58

5.2 Limitation ................................................................................................ 60

REFERENCES....................................................................................................... 62

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APPENDIX

Appendix 1. The Vietnam Development Goals..................................................... 66

Appendix 2: Map and economic regions of Vietnam ............................................ 69

Appendix 3: Expenditure poverty rate using the World Bank and

GSO poverty line..................................................................................... 70

Appendix 4: New poverty line of the Government, period 2006-2010 ................. 70

Appendix 5: Poverty rate using the new poverty line of the Government,

period 2006-2010 .................................................................................... 70

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LIST OF TABLES

Table 2.1: Classication of activities: sectorial, functional, spatial activities......... 18

Table 3.1: Description of the variables.................................................................. 33

Table 4.1: Wilcoxon rank-sum (Mann-Whitney) test for earned income

per capita (without remittance): rural vs. urban ...................................... 42

Table 4.2: Wilcoxon rank-sum (Mann-Whitney) test for earned income

per capita (with remittance): rural vs.urban ............................................ 42

Table 4.3: T-test for equality of means of earned income per capita .................... 45

Table 4.4: Correlation coefficient between log of earned income per capita

and other exploratory variables............................................................... 47

Table 4.5: Regression result of Logarithm of

Earned Income without remittances........................................................ 51

Table 4.6: Regression result of Logarithm of

Earned Income with remittances............................................................. 55

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