The Vietnam Access to Resources Household SurveySupporting Evidence-based Policy through Data Collection, Capacity Building and Collaboration

Professor Finn Tarp, University of Copenhagen and UNU-WIDER

Background

• Vietnam has made substantial socio-economic progress. . .

• Challenges remain:• Completing the on-going structural transformation

of the economy• Distributing the benefits of economic growth,

especially to rural areas• . . . Much remains to be learnt about the pattern of

changes in wealth and welfare in a socialist-oriented market economy

2

Why Survey Data?

• Surveying and re-surveying the same households over time is

difficult and time-consuming

• So: why invest in panel data?

• How household welfare changes over time matters and we

want to understand its determinants

• Macroeconomic growth means that choice and material welfare

are indeed improving on average

• But: averages hide a lot of variation

• . . . and variation reveals a lot about underlying realities and

point us to what to do about it3

The VARHS Project

• The VARHS project supports policymakers with Vietnamese and international research expertise

• We produce detailed information about rural households, including• Creating bi-annual panel data sets, building capacity to

do research, producing original research• Implemented by the University of Copenhagen, CIEM,

ILSSA, and CAP-IPSARD

4

The VARHS Project (continued)

• VARHS is a unique panel survey which allows us to investigate whether: • Some areas or groups are being left behind• Households are not sharing equally in overall economic growth• Some regions need additional resources or policy innovation

• It supplements and extends the VHLSS• Supplements: repeated surveys of the same households (a unique

panel dataset)• Extends: asks questions about land, agriculture, income, spending,

assets, investments, market linkages, and much more…

5

VARHS Over Time

• The Vietnam Access to Resources Household Survey (VARHS) has

been implemented since 2002, in 2006, 2008, 2010 and 2012 (with

financial support from Danida since 2006)

• 2012 round includes updates

• And new questions about migration, climate change, and social welfare

6

VARHS Provinces

Red River Delta: Ha Tay

North East: Lao Cai and Phu Tho

North West: Lai Chau and Dien Bien

North Central Coast: Nghe An

South Central Coast: Quang Nam and

Khanh Hoa

Central Highlands: Dak Lak, Dak Nong,

and Lam Dong

Mekong River Delta: Long An

7

• 2002: 932 households in four provinces

• 2006: 2,324 households in 12 provinces

• 2008: 3,223 households

• 2010: 3,202 households, of which 2,200 panel households

• 2012: 3,700 households surveyed

• Of which 2,741 are included in the 2012 report

• 2,197 panel households

8

Sample Size Has Grown over Time

The 2012 (Most Recent) Descriptive Report

• Presented in August at CIEM, available in print / online

• Produced collaboratively between partner institutions University of Copenhagen, ILSSA, CAP-IPSARD, and CIEM

• Reflects shared commitment to building research capacity, for example

• Research visit to the University of Copenhagen

• Applied economics course given in Ha Noi

• Continuous capacity building through collaboration

9

Relationship to VLSS / VHLSS

• General Statistics Office has implemented the Vietnam Household Living Standards Survey (VHLSS) since 1992 with support from the World Bank and others

• While VARHS follows households over time, VHLSS generates nationally representative data in each cross-section

• But does not track a large number of households across multiple survey rounds.

• The VARHS supplements and extends the VHLSS.

• 2,200 households surveyed in 2006 are included in each subsequent round

• Provides repeated data points about these households over time

10

• Descriptive report is an extensive summary of the whole data set

• But many questions important to policy need in-depth analysis

• Especially to identify causality: averages and trends along cannot do this

• Difficult and time-consuming

• But essential input to policymaking

11

“The Effectiveness of Credit in Poverty Alleviation: An Application to Rural Vietnam”

“Access to Land: Market- and non-Market Land Transactions in Rural Vietnam”

12

Studies Based on 2008 Data

"Constraints to market participation in agriculture in Vietnam”

“Income Shocks and Household Risk-Coping Strategies: The Role of Formal Insurance in Rural Vietnam”

“Inter- and Intra-Farm Land Fragmentation in Vietnam”

“Non-farm Income, Diversification, and Income: Evidence from Rural Vietnam”

“The availability and effectiveness of credit in rural Vietnam: Evidence from the Vietnamese Access to Resources Household Survey 2006 -2008-2010”

“Social Capital and Savings Behavior: The impact of group membership on household formal savings in rural Vietnam”

“Welfare Dynamics in Rural Vietnam, 2006 to 2010”

13

Studies Based on 2010 Data

"Social and Economic Determinants of Happiness in Rural Vietnam“

“Migration and the Impact of Remittances and Information on Sending Households: Evidence from Vietnam”

“Diversity Among Rapid Transformation: Welfare Dynamics in Rural Vietnam, 2006 to 2012”

“Non-farm Income, Diversification, and Income: Evidence from Rural Vietnam”

14

Studies Based on 2012 Data

Firstly, agriculture remains very essential

15

Broad Picture of Findings

Agriculture Remains Essential

• Most income for most rural households continues to come from farming and livestock, especially in North and Central Highlands (the six)

• Commercial sales of agriculture/livestock have grown in importance from 2008 to 2012

• Policies to support the commercialisation of agriculture and link these households with markets still key to continued progress

16

Agriculture Remains Essential (cont.)

• Big provincial differences: commercialisation is chronically low in Lao Cai, Lai Chau, and Dien Bien

• ...enabling markets for land sale and rental and land titling may increase land-related investment, which has decreased from 2012 to 2010

• 25% of surveyed households still benefit from Common Property Resources• Implementing environmental policies is a short-term challenge• Only 8% of CPR activities reported to be regulated

17

Secondly, progress is strikingly unequal

18

Unequal Progress

• The average “story” told by several rounds of the VARHS is positive• Unambiguous and meaningful increase in overall prosperity

according to different measures• Implication for policy: Vietnam is in general on the right track

• But the average story is not the whole story• Inequality in many dimensions of “welfare” still widespread• In some cases, it is increasing (wage employment and in

agriculture)• The VARHS is useful because we can see variation at the HH level

beyond the averages (and medians)• This informs policy • …and is uniquely able to study changes over time

19

Unequal Progress (continued)

• Households are generally better educated and have access to more resources

• However, those resources are unequally shared• Lao Cai, Lai Chau, and Dien Bien lag behind in many important

factors such as poverty • In Lao Cai, food security has dropped significantly from 2010 to

2012

20

Finally, fundamental changes in wealth and income underway

21

Wealth Creation is Changing

• Agriculture is still very relevant to how households earn income and accumulate wealth...• ...but income from household enterprises and wages is quickly

becoming important (but in different ways and importance)• Average household in surveyed provinces earns between 15% (Lam

Dong) and 40% (Khanh Hoa) of net household income from wages

22

Wealth Creation is Changing (continued)

• Household enterprises contribute less to household income than agriculture (12.5% compared to 32.3% from agriculture) • but are increasingly important and absorbing larger shares of

household labour• Richer households are much less likely to own agricultural land,

“graduating” from agriculture• Migration / remittances is an important feature of the rural

economy: between 8% (Lao Cai) and 46% (Nghe An) report a migrant

23

Main Points

• There is a large, persistent gap in development outcomes between upland and lowland areas

• And between members of the Kinh majority and other ethnic groups• Households in upland areas are significantly poorer• Have much lower access to essential goods such as safe drinking

water and high-quality housing• Much less connected to markets for land, labour, and agricultural

inputs

• These gaps should be a major focus for policymakers

24

Policy Relevant?

25

From Evidence to Policy

• Economic development in upland areas should be a priority• Big payoffs to investments in human capital and

physical infrastructure• Enabling upland communities to add value through

access to markets for goods, labour, and capital• Internal migration may be one part of the

answer

26

Increasingly Successful Mainstreaming

27

Legislation Details

Decree no. 61 on InvestmentRevised legislation on agricultural investment

Decision 80, Ministry of Agriculture and Rural Development

Updating legislation governing contract farming arrangements

New Rural Village Program

Provided references for the implementation process of the cross-Government, national New Rural Village Program pilot program

Resolution N0 26/NQ-TW on agriculture

Introduced new national target programs in agricultural training, climate change adaptation, and construction of New Rural Areas

Land Law revision Providing data and research results on land fragmentation as an input to the on-going revision of Vietnam's Land Law

Decree 41/2010/ NĐ-CP Introducing credit schemes targeting small-scale agricultural producers

Increasingly Successful Mainstreaming

28

Government research programs

Risk Analysis: Risks Racing Vietnamese Agricultural Households

Take advantage of VARHS data on reported income shocks to rural households used to study risks facing small-scale family-run farms

Situation Analysis and Proposed Solutions for Improving Efficiency of Vietnamese Agricultural Extension Services

Uses reported uptake of Government extension services used to study their efficacy and penetration

Promoting the Concentration of Land for Agricultural Production

Exploits VARHS plot-level data used to study land concentration and agricultural income

National Strategy for Agriculture and Rural Development to 2020, vision to 2030

Uses survey data and analysis on rural residents’ livelihood, agricultural productivity, welfare and household risk assessments

Policy evaluation of pro-poor programs 30a, 80a, and National Program for Poverty Reduction

Assessment of the impacts of financial crisis on rural households in 2009

References VARHS data on coverage of, and households' access to, programs for 'Speedy and Sustainable Poverty Reduction'

VARHS panel data used for comparisons of households across time in conjunction with aggregated Commune- and Province-level data from the VARHS and other sources

Increasingly Successful Mainstreaming

29

Government Publications

Ministry of Planning and Investment:

State Management of District Peoples’ Committees: Problems and Solutions

Ministry of Agriculture and Rural Development:

Social impacts of implementing the land law 2003 on rural households Enhancing the market participatory of farmer through agricultural value chain The roles and solutions to strengthening the cooperative’s role to its members in rural area of Viet Nam

Ministry of Labor, Invalids, and Social Affairs:

Labor demand in emerging processing industries (also published by ILO as “Labor and Social Trends in Vietnam”)

A thematic report on access to household access to resources from a gender-based perspective

What’s Next?

• VARHS will continue to monitor development in rural Vietnam and collect much-needed data

• VARHS will continue to collaborate on rigorous research and build capacity to do this research

• Policies based on economic evidence can improve outcomes for rural households • Especially in areas that have not yet shared

equally in Vietnam’s exceptional growth

30

What’s Next? (Continued)

• A further round of VARHS in 2014 would be very desirable

• Appears that this is feasible• However: support for research and policy outputs

remains a priority• Mainstreaming research is an area where donor

partners can be proactive• CAP/IPSARD provides several examples of how

successful this approach has been so far…

31

On-Going Research: Example from the VARHS 2012 round…

32

Economic Development and Subjective Well-Being

An in-depth study based on VARHS 2012

Introduction• Aim: Understand how the many dimensions of economic

development affect happiness/life satisfaction in rural Vietnam– Specific focus on the effects of income and occupation,

but other factors also considered.

• Standard economic analyses focus on objective measures of welfare, such as consumption or fulfillment of “basic needs”.

• We supplement these analyses by using a subjective measure of welfare, namely self-reported life satisfaction, or “happiness”.

Introduction

• Happiness has recently attracted a lot of attention from economists, but most studies focus on Western countries.

• This is the first, systematic study of happiness in Vietnam.

Literature on happiness

• Effect of income on happiness is controversial– Deaton (2008) finds that life satisfaction is higher in rich countries

than in poor.– On the other hand, Easterlin (1974, 2003) and Layard (2006) point out

that although income has increased strongly in e.g. the U.S., self-reported happiness is stable.=> indicates that relative rather than absolute levels of income matter.

Literature on happiness

• Effects of occupation have been studied less– Exception: many studies find negative effect of unemployment.– We study effects of wage work vs. self-employment in agriculture or

non-agriculture.– Expected effect ambiguous: Wage work reduces uncertainty but also

leads to loss of autonomy and possibly status.

• Other studies find that health, age, marital status, shocks and social capital are also important determinants of happiness/life satisfaction.

Data

• VARHS 2012: 2,740 observations.• Drawback: only one respondent per household, typically the

household head.• Advantages:

- Cluster-sampling=> we can estimate average income in local neighborhood => we can distinguish between effects of absolute and relative income.

- Previous survey rounds => we can estimate effect of changes vs. levels of income.

- Very information-rich survey => many potential determinants of happiness can be investigated.

Happiness

Very pleased with your life7%

Rather pleased with your life

45%

Not very pleased with your life

42%

Not at all pleased with your life

6%

"Taking all things together, would you say you are.."

Happiness and income

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0.65

0.7

0.75

1 2 3 4 5 6 7 8 9 10

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Income decile

Happiness and main occupation

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0.65

Own farm Wage labor HH enterprise CPR collection No occupation

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Happiness and children

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0 1 2 3 4 or more

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Number of children below 15 in hh

Happiness and marital status

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0.55

0.6

Married Single, never married Widowed Divorced/separated

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Happiness and ethnicity

0.3

0.35

0.4

0.45

0.5

0.55

0.6

Kinh Non-Kinh

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Happiness and formal networks

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0.65

0.7

0.75

0.8

Communist Party Mass organization Other formal group No formal groups

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Respondent member of...

Happiness and informal networks

0.3

0.35

0.4

0.45

0.5

0.55

0.6

0-9 10-19 20 or more

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Number of weddings attended in other households

Happiness and shocks

0.3

0.35

0.4

0.45

0.5

0.55

0.6

No shocks Natural disaster Pest infection,crop disease or

avian flu

Economic shock(price change,

unemployment, investment failure

or land loss)

Death, seriousillness or injury

Other shock

Shar

e "v

ery"

or "

rath

er"

plea

sed

with

life

Household hit by…

Table 1: Determinants of happiness

Dependent variable: Happiness (four categories)Income per hh member, log 0.433** 0.392*** 0.476*** 0.474***

[0.038] [0.040] [0.048] [0.077]Median commune income per capita, log -0.125* -0.099 -0.141* -0.341**

[0.069] [0.073] [0.077] [0.168] Change in log income per cap, 2010-2012 -0.156*** -0.192***

[0.036] [0.058]Main occupation Wage worker -0.119** -0.323*** -0.367*** -0.345***

[0.052] [0.060] [0.067] [0.096]Non-farm enterprise 0.082 -0.217*** -0.292*** -0.321***

[0.075] [0.083] [0.092] [0.119] CPR collection -0.186 -0.186 -0.220 -0.219

[0.179] [0.167] [0.204] [0.317]None 0.017 -0.096 -0.111 -0.086

[0.072] [0.079] [0.086] [0.130]Control variables No No Yes Yes Yes

<<

Table 1: Determinants of happiness, continuedLandless 0.095 0.064 0.124

[0.084] [0.105] [0.153]Female -0.031 -0.066 0.009

[0.073] [0.081] [0.123]Age in year -0.030*** -0.036*** -0.019

[0.011] [0.013] [0.021]Age squared/1000 0.338*** 0.394*** 0.235

[0.098] [0.120] [0.188]Years of schooling, ln(x+1) 0.112*** 0.121*** 0.252***

[0.042] [0.044] [0.095]Children below 15, ln(x+1) 0.005 0.079 0.113

[0.050] [0.057] [0.091]Marital status Never married -0.199 -0.248* -0.363*

[0.123] [0.144] [0.197]Widowed -0.265*** -0.255*** -0.282**

[0.087] [0.094] [0.134]Divorced or separated -0.623*** -0.653*** -0.457

[0.207] [0.246] [0.440]Kinh -0.084 0.003 0.426**

[0.112] [0.118] [0.195]

Table 1 : Determinants of happiness, continuedMember of Communist Party 0.528*** 0.487*** 0.576***

[0.099] [0.117] [0.214]Member of Mass Organization 0.174*** 0.167*** 0.147

[0.057] [0.064] [0.119]Member of group other than party, mass org 0.148* 0.098 0.121

[0.077] [0.083] [0.121]

Weddings attended in other hh, log(x+1) 0.138*** 0.117** 0.078[0.040] [0.046] [0.073]

Shocks to hh in last two yearsNatural disaster 0.000 0.022 -0.170

[0.084] [0.089] [0.160]Pest infection, crop disease or avian flu -0.064 -0.057 -0.060

[0.057] [0.062] [0.102]Economic (unemployment, loss of land etc.) -0.235** -0.242** -0.403**

[0.097] [0.105] [0.185]Illness -0.340*** -0.344*** -0.207

[0.083] [0.092] [0.141]Other shock 0.078 -0.048 -0.111

[0.209] [0.249] [0.521]

Table 1 : Determinants of happiness, continued

Days unable to work due to illness in last year, log(x+1) -0.060*** -0.056*** -0.003[0.019] [0.021] [0.032]

Head born in commune 0.109* 0.141** 0.130[0.059] [0.064] [0.106]

Hh member migrated -0.068 -0.065 -0.125[0.072] [0.077] [0.129]

Hh member migrated 0.149* 0.157* 0.234*[0.079] [0.085] [0.135]

Hh head -0.051 -0.08 -0.136[0.088] [0.098] [0.135]

Province dummies Yes Yes Yes Yes Yes

Observations 2,594 2,680 2,534 2,058 858Note: Ordered probit regressions. Standard errors adjusted for clustering at the village level. Regression 4 and 5 include only hh interviewed in both 2010 and 2012. Regression 5 includes only observations from communes with at least 10 observations.* significant at 10%; ** significant at 5%; *** significant at 1%

Table 2: Occupation and happinessDependent variable: Happiness (four categories)

Age<49 Age>=49 Main occupationWage worker -0.254*** -0.399***

[0.085] [0.106]Unskilled wage worker -0.324***

[0.072]Skilled wage worker -0.321***

[0.084]Private sector wage worker -0.361***

[0.064]Public sector wage worker -0.225*

[0.118]SOE wage worker -0.182

[0.250]Wage worker in:Agriculture -0.304**

[0.135]Mining -0.484

[0.341]Manufacturing -0.361***

[0.123]Construction -0.285***

[0.093]Services -0.341***

[0.091]

Province dummies Yes Yes Yes Yes YesControl variables As in Tab. As in Tab. As in Tab. As in Tab. As in Tab.

Conclusions

• Income a strong determinant of happiness.• But relative income may be more important than absolute.• Controlling for level of income, recent income growth has

a negative effect on happiness.• Holding income constant, workers on own farms are more

happy than wage workers and non-farm enterprise operators.

• Party members are much happier than others.• Age, marital status, networks and shocks are also

important determinants of happiness.

Conclusions

• Results are remarkably similar to those from rich, Western countries, for example for income, age, health, schooling, marital status and social networks.

• Implication: The values of farmers in rural Vietnam are not radically different from those of people in the streets of Copenhagen or New York. Our core values are not “Western” or “Eastern”, “traditional” or “modern”, but universal.

Thank you!

• ILSSA for data collection and collaboration on the draft report

• CIEM and CAP-IPSARD for joint research • Danida and the Embassy of Denmark in Viet Nam for

support • Participants, commentators and numerous colleagues

55