Does Agriculture Help Poverty and Inequality Reduction? Evidence from Vietnam

Abstract

This paper measures impacts of production of crops, forestry, livestock and aquaculture on household welfare, poverty and inequality in rural Vietnam using fixed-effects regressions. Data used in this paper are from Vietnam Household Living Standard Surveys 2002 and 2004. It is found that impact estimates of the production of crops and forestry on per capita income and consumption expenditure are not statistically significant. Impact estimates of the livestock production are positive and statistically significant for per capita income, but not statistically significant for per capita expenditure. However, the aquacultural production has positive and statistically significant impacts on both income and expenditure. As a result, the aquacultural production helps the producing households reduce the poverty incidence by 4.3 percentage points. It also decreases the poverty gap and poverty severity indexes of the producing households by around 13 percent and 15 percent, respectively. The aquacultural production also reduces the rural expenditure inequality, albeit at an extremely small magnitude.