Farming efficiency, cropland rental market and income effect: evidence from panel data for rural Central Vietnam

Abstract

Abstract Understanding the drivers and income effects of land rental markets is important to facilitate agricultural transformation. This study uses a panel dataset of rural households in Vietnam to examine the efficiency, equity and income effects of land rental markets. Probit and tobit models find that land is transferred from less to more efficient farmers and thus removing administrative barriers to the market operation is suggested. However, instrumental variable and quantile regressions show that the poor do not benefit significantly from participation in the markets. This highlights the need to take care of the poor to ensure that they are not left behind. Further analysis might focus on the efficiency thresholds that farmers switch from a market regime to another.