Income sources and inequality among ethnic minorities in the Northwest region, Vietnam

Abstract

This study analyzes the sources of income inequality among ethnic minorities in the Northwest region—the poorest and highest inequality region of Vietnam. Using an analysis of Gini decomposition by income source, the results show that while agricultural income, notably crop income, considerably decreases income inequality, off-farm income sources (wage and non-farm self-employment incomes) are found to increase inequality. This can be explained that in comparison with other income sources, agricultural income is more equally distributed and the main income source for most poor households. However, off-farm income sources are more unequally distributed and flow disproportionately toward the better-off. The findings support the hypothesis that income diversification in non-farm activities results in either greater inequality if opportunities for these activities are skewed toward to the better-off or less inequality if such opportunities are accessible to the poorer part of the population.