TY - JOUR

T1 - Shocks, household consumption, and livelihood diversification

T2 - a comparative evidence from panel data in rural Thailand and Vietnam

AU - Nguyen, Duy Linh

AU - Nguyen, Trung Thanh

AU - Grote, Ulrike

N1 - Funding Information: We would like to thank the respondents from the surveyed provinces for their kind support and cooperation. We acknowledge the financial support of the German Research Foundation (DFG—FOR 756/2) for the TVSEP project and appreciate the efforts of our colleagues at the Leibniz University Hannover for data collection and cleaning. We also thank the participants of the 6 Economics of Natural Resources and the Environment Conference organized by the University of Thessaly (11-12.06.2021) and four anonymous reviewers for their comments to improve our study.

PY - 2023/10

Y1 - 2023/10

N2 - We examine the roles of land and labor diversification in mitigating the effects of covariate and idiosyncratic shocks in the two middle-income countries Thailand and Vietnam. We use an unbalanced panel dataset of rural households obtained from five survey waves during 2007–2016 (9291 households for Thailand and 9255 households for Vietnam). We employ the System-Generalized Method of Moments estimators to control for endogeneity. Our study finds that (i) rural households in both countries are able to maintain per capita consumption in the face of idiosyncratic shocks but not covariate shocks; (ii) labor diversification in Thailand and land diversification in Vietnam are used as ex-post coping strategies against covariate shocks but their shock-mitigating roles are insignificant; and (iii) land diversification in Thailand and labor diversification in Vietnam are helpful in improving per capita consumption when households face covariate shocks. Our findings suggest that facilitating access to credit, enhancing farm mechanization, and improving road quality in Thailand as well as promoting the development of local rural nonfarm sectors in Vietnam would benefit rural households in dealing with covariate shocks.

AB - We examine the roles of land and labor diversification in mitigating the effects of covariate and idiosyncratic shocks in the two middle-income countries Thailand and Vietnam. We use an unbalanced panel dataset of rural households obtained from five survey waves during 2007–2016 (9291 households for Thailand and 9255 households for Vietnam). We employ the System-Generalized Method of Moments estimators to control for endogeneity. Our study finds that (i) rural households in both countries are able to maintain per capita consumption in the face of idiosyncratic shocks but not covariate shocks; (ii) labor diversification in Thailand and land diversification in Vietnam are used as ex-post coping strategies against covariate shocks but their shock-mitigating roles are insignificant; and (iii) land diversification in Thailand and labor diversification in Vietnam are helpful in improving per capita consumption when households face covariate shocks. Our findings suggest that facilitating access to credit, enhancing farm mechanization, and improving road quality in Thailand as well as promoting the development of local rural nonfarm sectors in Vietnam would benefit rural households in dealing with covariate shocks.

KW - Covariate and idiosyncratic shocks

KW - Diversification

KW - Household consumption

KW - System-generalized method of moments

UR - http://www.scopus.com/inward/record.url?scp=85128098253&partnerID=8YFLogxK

U2 - 10.1007/s10644-022-09400-9

DO - 10.1007/s10644-022-09400-9

M3 - Article

AN - SCOPUS:85128098253

VL - 56

SP - 3223

EP - 3255

JO - Economic Change and Restructuring

JF - Economic Change and Restructuring

SN - 1573-9414

IS - 5

ER -