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Urban and Rural Dimensions of Income Inequality in Vietnam

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Abstract

This study analyzes urban and rural inequalities in Vietnam by applying two techniques of inequality decomposition by population groups and income sources based on two data sets from the nationwide household surveys in 2002 and 2004. It is found that within-sector inequalities in income distribution are substantially higher than that in expenditure distribution because expenditure level is more dependent on location characteristics of a household, while the determinants of income level seems to stay in other characteristics such as education and occupations of household members. Income inequality within the urban sector is higher than that in the rural sector because urban income mainly comes from wage employment and non-farm self-employment, which are more unequal than agricultural income. Interestingly, wage employment appears to be an equalizing income source in both urban and rural areas. Agricultural income is undeniably an inequality-equalizing source. Therefore, much of income inequality stays in the distribution of sources other than wage and agriculture. Based on the review of current policies related to income distribution and decomposition analysis, the paper suggests that income diversification, development of private sector, encouraging rural-urban migration and trade liberalization would be appropriate for increasing income level while restraining increasing inequality.

Suggested Citation

  • Thi Cam Van Cao & Takahiro Akita, 2008. "Urban and Rural Dimensions of Income Inequality in Vietnam," Working Papers EMS_2008_04, Research Institute, International University of Japan.
    • Handle: RePEc:iuj:wpaper:ems_2008_04
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    References listed on IDEAS

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    Cited by:

    1. Aekapol Chongvilaivan & Jungsuk Kim, 2016. "Individual Income Inequality and Its Drivers in Indonesia: A Theil Decomposition Reassessment," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(1), pages 79-98, March.
    2. Rachmat Mulia & Elisabeth Simelton & Tan Quang Nguyen & Magnus Jirström, 2021. "Non-Farm Activities and Impacts beyond the Economy of Rural Households in Vietnam: A Review and Link to Policies," Sustainability, MDPI, vol. 13(18), pages 1-22, September.
    3. Hien Nguyen & Tinh Doan & Tuyen Quang Tran, 2020. "The effect of various income sources on income inequality: a comparison across ethnic groups in Vietnam," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(2), pages 813-834, February.
    4. Hien, Nguyen Thi Thu, 2019. "Consequences of urban migration of adult children for the elderly left-behind in rural Vietnam," OSF Preprints zxyf8, Center for Open Science.
    5. Tran, Tuyen & Vu, Huong, 2013. "Farmland loss, nonfarm diversification and inequality: A micro-econometric analysis of household surveys in Vietnam," MPRA Paper 47596, University Library of Munich, Germany.

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    More about this item

    Keywords

    Income Inequality; Urban and Rural Dimensions; Theil Decomposition Analysis; Gini Decomposition Analysis; Vietnam; Asia;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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