A Microeconometric Analysis of the Welfare of Households in Vietnam and China: Poverty, Vulnerability and Inequality

Abstract

This thesis provides four chapters investigating the welfare of households in terms of their poverty, vulnerability and inequality in Vietnam and China. Both of these countries have experienced periods of unprecedented economic growth accompanied by a remarkable and rapid decline in the national poverty rate and have attracted considerable attention in the development economics literature. In contrast, empirical studies on household vulnerability, a concept similar but distinguishable from poverty, have been lacking and this is in spite of its importance in understanding households' living standards. On the other hand, high economic growth in Vietnam and China has not only increased the average level of households welfare measured in per capita consumption expenditure, but has also widened inequality. In chapter 1, ex ante measures of vulnerability are constructed using the Vietnam Household Living Standard Survey (VHLSS) 2002 and 2004, and then compared with static indicators of poverty. The panel data show that: (i) in general, vulnerability in 2002 translates into poverty in 2004; (ii) the vulnerability of the poor tends to perpetuate their poverty; and (iii) sections of the non-poor, but vulnerable, can slip into poverty.Chapter 2 investigates the economic gap between ethnic majority and minorities groups. In general, households belonging to the ethnic minority group are poorer and more vulnerable to shocks. Econometric analyses suggest that the ethnic minorities are poorer and have a high probability of poverty, not necessarily because they have more disadvantaged household characteristics (e.g. educational attainment or location), but, more importantly, because the returns to these characteristics are much lower for ethnic minorities than for the majority groups.Chapter 3 extends research with respect to ethnicity further, decomposing the minority groups into several homogenous groups, based on the place to live. It shows that the pace of poverty reduction for minorities has surpassed the former over the period 2002 to 2006, although poverty is still concentrated in the minority groups. The decomposition analyses of inequality within each group show that the main driver of inequality is different across the ethnic groups. Finally, the impacts of taxation on poverty and ex ante vulnerability of households in rural China are examined in chapter 4, based on national household survey data in 1988, 1995 and 2002. The findings are: (i) poverty and vulnerability have reduced significantly with a great deal of geographical disparity; (ii) education, land, and access to infrastructure and irrigation facilities are the key factors to reduce vulnerability; and (iii) the highly regressive tax system increased farmers' poverty and vulnerability. The abolition of rural tax since 2006 would thus have a significant negative impact on both the poverty and vulnerability of rural households.

Date of Award	1 Aug 2011
Original language	English
Awarding Institution	The University of Manchester
Supervisor	Katsushi Imai (Supervisor) & Chris Orme (Supervisor)