Land quality, income, and poverty among rural households in the North Central Region, Vietnam

Abstract

AbstractWhile the role of agricultural land size in rural Vietnam is well established for rural livelihoods, no evidence for the importance of land quality has been provided thus far in the literature. In the current study of the North Central Region of Vietnam, we examine how land quality affects crop income, total income, and poverty using secondary data from a sample of 2,468 households. In particular, we used an instrumental variable method to address the potential endogeneity of land quality. We provide the first evidence that land quality increases local household income and the likelihood of escaping poverty. The finding is robust even after accounting for the endogeneity of land quality and controlling for various important household characteristics. Notably, we show the mechanism by which land quality positively affects income and poverty reduction through its positive effect on crop income. Also, our study reveals that land fragmentation is negatively linked with land quality. This could be explained by the fact that fragmented land receives less investment (e.g., fertilizers or irrigation), resulting in lower land quality. The study offers a useful implication that reducing fragmentation may help local households invest more in land, thereby increasing crop income, which in turn improves their economic well‐being.