Household vulnerability as expected poverty in Vietnam

Abstract

Vulnerability and poverty are distinct yet highly correlated. Using data sets extracted from Vietnam Household Living Standard Surveys for 2002, 2004 and 2006, this study analyzes vulnerability as expected poverty in Vietnam and becomes the first to adopt the reference line in a vulnerability measure, along with cross-sectional data. This study estimates the extent of vulnerability and analyses who the vulnerable are. In addition, this study investigates the link between dynamic poverty and vulnerability, something which has rarely been done. The results reveal that, (i) vulnerability estimated using the reference line is more appropriate than when estimated using the actual poverty line for poverty prediction in the case of Vietnam; (ii)ex ante vulnerability in previous periods might translate to ex post poverty in the following periods though both vulnerability and the incidence of poverty tend to fall over time; (iii) the vulnerability of the poor may trap them in poverty; and (iv) the vulnerability of the non-poor could propel them into poverty.