The impacts of farmland expropriation on Vietnam’s rural households

The expropriation of agricultural land to provide new land for industrial and urban expansion, referred to as compulsory acquisition, is prevalent in developing countries. Using Vietnam as a laboratory, this study evaluates the impacts of losing farmland through compulsory acquisition on household welfare and reaches the following findings. A 10 percentage point increase in the fraction of land expropriated results in a 2.2% decrease in household welfare proxied by food expenditure. Furthermore, politically unconnected and ethnic minority households are disproportionately vulnerable. The adverse welfare effect could take up to 10 years to evaporate. The reduction in household welfare is attributable to the decline in agricultural income and the inability to participate in the non‐agricultural labor market. Other aspects of household behavior following compulsory acquisition are also explored, such as saving, social capital, labor, and capital allocation.