Shocks, household consumption, and livelihood diversification: a comparative evidence from panel data in rural Thailand and Vietnam

Abstract

We examine the roles of land and labor diversification in mitigating the effects of covariate and idiosyncratic shocks in the two middle-income countries Thailand and Vietnam. We use an unbalanced panel dataset of rural households obtained from five survey waves during 2007–2016 (9291 households for Thailand and 9255 households for Vietnam). We employ the System-Generalized Method of Moments estimators to control for endogeneity. Our study finds that (i) rural households in both countries are able to maintain per capita consumption in the face of idiosyncratic shocks but not covariate shocks; (ii) labor diversification in Thailand and land diversification in Vietnam are used as ex-post coping strategies against covariate shocks but their shock-mitigating roles are insignificant; and (iii) land diversification in Thailand and labor diversification in Vietnam are helpful in improving per capita consumption when households face covariate shocks. Our findings suggest that facilitating access to credit, enhancing farm mechanization, and improving road quality in Thailand as well as promoting the development of local rural nonfarm sectors in Vietnam would benefit rural households in dealing with covariate shocks.

Local infrastructure, rural households' resilience capacity and poverty: evidence from panel data for Southeast Asia

“…We rely on consumption data to measure the poverty of rural households following Haughton and Khandker (2009), Nguyen et al (2022a) and Forster (1998). We use several indicators of absolute poverty, relative poverty and multidimensional poverty.…”

“…Therefore, economic integration is inadequate and is doomed to produce poverty. Furthermore, the Vietnamese regions are regularly subject to natural disasters like floods and storms, which further fuels economic deterioration (Nguyen et al ., 2022a, b). The final sample for this study consists of 1,698 households in Thailand and 1,701 households in Vietnam from three survey waves conducted in 2010, 2013 and 2016.…”

“…We rely on consumption data to measure the poverty of rural households following Haughton and Khandker (2009), Nguyen et al . (2022a) and Forster (1998).…”

An Analysis of Livelihood-Diversification Strategies among Farmworker Households: A Case Study of the Tshiombo Irrigation Scheme, Vhembe District, South Africa

“…Diversification can protect vulnerable households from environmental and economic shocks [12]. Shocks disrupt household income and consumption flows and cause welfare losses in developing countries [13]. Catastrophic disasters, such as storms, floods, and droughts, can directly deplete household resources, drive poverty traps, increase inequality, and exacerbate poverty for people who are already poor [14].…”

“…Catastrophic disasters, such as storms, floods, and droughts, can directly deplete household resources, drive poverty traps, increase inequality, and exacerbate poverty for people who are already poor [14]. In addition, certain particular shocks, such as health shocks, can endanger households and limit the ability of major earners to work, increasing healthcare costs and undermining the constant flow of income [13]. Eneyew and Bekele [12] pointed out that livelihood-diversification strategies are complex.…”