Income Diversification Among Rural Households in the Mekong River Delta, Vietnam: A Look Back at the Economic Transition Period

Abstract

Based on five Living Standard Measurement Surveys (LSMSs) conducted over a thirteen year period (1993 to 2006), this paper examined patterns of income diversification in rural areas of the Mekong River Delta (MRD). In terms of quintile specific patterns, over the period 1993-2006, across all quintiles there is a sharp reduction in the time spent on farm self-employment (9.4 to 20.7 percentage points) and an increase in the share of time spent on non-farm wage employment (11.3 to 14.3 percentage points). While there are differences across quintiles, the patterns are broadly similar across expenditure groups and it does not seem that the increase in non-farm wage employment is restricted to particular groups of households. As may be expected given the changes in the activity-allocation pattern, over time, there is an increase in reliance on non-farm wage income by about 6.4 to 11.4 percentage points across quintiles. The interesting aspect is that while households in the poorest income quintiles still continue to rely heavily on agriculture related income (61.2 versus 39.9 percent for the richest quintile) they experience similar patterns of change in terms of a movement from relying on farm income to non-farm sources of income.