1 Introduction
2 Literature review
3 Theoretical framework and empirical strategies
3.1 Theoretical framework
3.2 Econometric strategies
3.2.1 Identifying the impacts of shocks on consumption and livelihood diversification
3.2.2 Determining the shock-mitigating effect of livelihood diversification
4 Data
4.1 Data source
4.2 Measures of livelihood diversification
4.2.1 Land diversification
4.2.2 Labor diversification
5 Results and discussion
5.1 Description of rural setting and livelihood
5.1.1 Characteristics of rural households and villages
Variable | Thailand | Vietnam | Difference | ||||||
---|---|---|---|---|---|---|---|---|---|
Whole sample | Without shock | With shock | Whole sample | Without shock | With shock | (1) &(4) | (2) & (3) | (5) & (6) | |
(1) | (2) | (3) | (4) | (5) | (6) | ||||
Household level | |||||||||
Total consumption per capita (PPP USD$) | 2008.9 (1925.7) | 1929.0 (1976.4) | 2061.4 (1890) | 1424.9 (1167.3) | 1624.1 (1318.6) | 1356.4 (1102.3) | 583.9*** | −132.5*** | 267.6*** |
Age (years) | 57.1 (12.6) | 56.6 (12.6) | 57.4 (12.5) | 50.3 (13) | 51.4 (13.1) | 50.0 (13) | 6.7*** | −0.8*** | 1.4*** |
Ethnic majority (%) | 93.6 (24.4) | 93.5 (24.6) | 93.7 (24.3) | 78.6 (41) | 87.7 (32.9) | 75.5 (43) | 15.1*** | −0.2 | 12.2*** |
Education (years) | 5.0 (3.1) | 5.2 (3.3) | 4.9 (2.9) | 6.7 (4) | 7.3 (4.1) | 6.5 (3.9) | −1.7*** | 0.3*** | 0.7*** |
Household size | 4.1 (1.7) | 4.0 (1.7) | 4.1 (1.7) | 4.3 (1.7) | 4.1 (1.7) | 4.3 (1.7) | −0.2*** | −0.2*** | −0.3*** |
Household labor | 2.7 (1.3) | 2.6 (1.3) | 2.7 (1.3) | 2.8 (1.4) | 2.7 (1.4) | 2.8 (1.4) | −0.1*** | −0.1*** | −0.2*** |
Farmland size (ha) | 2.4 (3) | 2.2 (3.1) | 2.6 (2.8) | 0.7 (1.5) | 0.6 (2) | 0.7 (1.2) | 1.8*** | −0.3*** | −0.1*** |
Tractor | 0.6 (0.6) | 0.5 (0.6) | 0.6 (0.6) | 0.3 (0.5) | 0.3 (0.5) | 0.3 (0.5) | 0.2*** | −0.1*** | −0.1*** |
Motorbike | 1.3 (0.9) | 1.3 (0.9) | 1.4 (0.9) | 1.1 (0.9) | 1.2 (1) | 1.0 (0.9) | 0.3*** | −0.1*** | 0.2*** |
Savings (%) | 83.9 (36.8) | 81.9 (38.5) | 85.2 (35.6) | 36.3 (48.1) | 44.9 (49.8) | 33.3 (47.1) | 47.6*** | −3.3*** | 11.6*** |
Credits (%) | 69.3 (46.1) | 65.5 (47.6) | 71.8 (45) | 48.6 (50) | 36.7 (48.2) | 52.7 (49.9) | 20.7*** | −6.4*** | −16*** |
Livestock (TLU) | 1.7 (2.7) | 1.7 (2.8) | 1.7 (2.6) | 1.0 (1.7) | 0.9 (1.7) | 1.1 (1.8) | 0.7*** | −0.1 | −0.2*** |
Remittances (%) | 39.7 (48.9) | 37.8 (48.5) | 40.9 (49.2) | 21.2 (40.9) | 23.1 (42.1) | 20.5 (40.4) | 18.5*** | −3.0*** | 2.5* |
Health insurance | 0.1 (0.4) | 0.1 (0.4) | 0.1 (0.4) | 0.6 (1.3) | 0.6 (1.3) | 0.6 (1.2) | −0.5*** | 0.0 | .01*** |
Public transfer (%) | 59.7 (49.1) | 52.7 (49.9) | 64.3 (47.9) | 41.8 (49.3) | 33.9 (47.3) | 44.6 (49.7) | 17.9*** | −11.6*** | −10.7*** |
Village level | |||||||||
Road type (1 = good; 4 = bad) | 1.6 (0.8) | 1.6 (0.9) | 1.6 (0.8) | 1.9 (1) | 1.8 (1) | 1.9 (1) | −0.3*** | 0.0 | 0.1*** |
Distance to town (km) | 13.5 (8.4) | 13.2 (8.2) | 13.6 (8.6) | 12.5 (9.9) | 11.9 (9.4) | 12.7 (10) | 1.0*** | −0.4*** | −0.7*** |
Number of observations | 9291 | 3686 | 5605 | 9525 | 2430 | 7057 |
5.1.2 Land and labor use
Diversification level | Unit | Thailand | Vietnam | Difference | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Whole sample | Without shock | With shock | Whole sample | Without shock | With shock | (1) &(4) | (2) & (3) | (5) & (6) | ||
(1) | (2) | (3) | (4) | (5) | (6) | |||||
Land use | ||||||||||
Cereals | (%) | 74.8 (38.9) | 69.1 (42.7) | 78.4 (35.7) | 50 (40.3) | 46.4 (42.5) | 51.3 (39.4) | 24.73*** | −9.3*** | −4.91*** |
Vegetables and Melons | (%) | 2 (11) | 2.3 (12.7) | 1.7 (9.7) | 2.2 (10) | 2.5 (12) | 2.1 (9.2) | −0.24 | 0.6* | 0.39 |
Fruits and Nuts | (%) | 1.9 (11.3) | 2.3 (12.6) | 1.7 (10.4) | 4.3 (15.1) | 4.9 (17.4) | 4.1 (14.2) | −2.37*** | 0.62** | 0.75*** |
Oilseed crops and Oleaginous fruits | (%) | 0.1 (2.2) | 0.1 (2.4) | 0.1 (2) | 4.8 (13.5) | 5.1 (14.6) | 4.8 (13.1) | −4.75*** | −0.03 | 0.29 |
Root/tube crops with high starch | (%) | 3.8 (14.2) | 3.2 (13.4) | 4.3 (14.7) | 4 (12.4) | 3.1 (11.3) | 4.4 (12.8) | −0.22 | −1.09*** | −1.29*** |
Stimulant, spice and aromatic crops | (%) | 0 (1.1) | 0 (0.6) | 0 (1.3) | 17.8 (34.4) | 15.4 (33.1) | 18.7 (34.7) | −17.8*** | −0.03 | −3.22*** |
Sugar crops | (%) | 1 (7.6) | 0.9 (7.5) | 1 (7.6) | 0.2 (3.2) | 0.2 (2.9) | 0.3 (3.3) | 0.74*** | −0.14 | −0.11 |
Other crops | (%) | 1.6 (10.1) | 1.8 (10.7) | 1.5 (9.6) | 6.4 (19.7) | 4.9 (18.5) | 6.8 (20) | −4.73*** | 0.23 | −1.88*** |
Land diversification index | 0–100 | 21 (24) | 17 (22.8) | 23 (24.1) | 27 (21) | 21 (24) | 30 (26) | 6*** | −6*** | −9*** |
Labor use | ||||||||||
Own agricultural production | (%) | 61.8 (32) | 57.8 (34.9) | 64.5 (29.7) | 62.5 (30) | 55.5 (33.7) | 64.9 (28.2) | −0.63 | −6.7*** | −9.33*** |
Natural resource extraction | (%) | 1.6 (8.9) | 1.5 (8.9) | 1.6 (8.8) | 2.6 (10.9) | 2.5 (11) | 2.7 (10.9) | −1.04*** | −0.1 | −0.23 |
Nonfarm self-employment | (%) | 11.6 (22.5) | 13.3 (25.2) | 10.5 (20.4) | 11.9 (23.4) | 17.3 (28.7) | 10 (21) | −0.3 | 2.81*** | 7.34*** |
Temporary wage employment | (%) | 17.2 (25.3) | 18 (27.5) | 16.6 (23.7) | 11.7 (19.4) | 10 (19.3) | 12.3 (19.4) | 5.48*** | 1.32*** | −2.28*** |
Permanent wage employment | (%) | 7.8 (19.4) | 9.4 (22.3) | 6.8 (17.2) | 11.3 (21.5) | 14.7 (25.2) | 10.2 (20) | −3.52*** | 2.67*** | 4.51*** |
Labor diversification index | 0–100 | 46 (38) | 42.8 (38.4) | 47.4 (37.9) | 49 (37) | 47.7 (38) | 49.2 (37) | −3*** | −0.05*** | −0.02* |
Number of observations | 9291 | 3686 | 5605 | 9525 | 2430 | 7057 |
5.1.3 Shocks
Type of shock | Thailand | Vietnam | Difference |
---|---|---|---|
Covariate shock (Cov_shock) of which: | 41.9 (49.3) | 44.2 (49.7) | −2.4*** |
Flood | 9.3 (29) | 14.8 (35.5) | −5.5*** |
Drought | 26.3 (44) | 17.3 (37.8) | 9.0*** |
Storm | 1.4 (11.8) | 8.2 (27.5) | −6.8*** |
Other climate shocks | 1.2 (10.7) | 9.6 (29.4) | −8.4*** |
Market shock | 15.1 (35.8) | 4.5 (20.8) | 10.6*** |
Idiosyncratic shock (Idio_shock) of which: | 37.7 (48.5) | 57.0 (49.5) | −19.3*** |
Demographic shocks | 23.4 (42.3) | 34.1 (47.4) | −10.8*** |
Agricultural production shocks | 8.9 (28.5) | 26.1 (43.9) | −17.2*** |
Financial shocks | 10.0 (30) | 9.6 (29.5) | 0.4 |
Other idiosyncratic shocks | 4.6 (21) | 6.8 (25.2) | −2.2*** |
Number of observations | 9291 | 9525 |
5.2 Estimation results and discussion
5.2.1 Impact of shocks on household consumption
Dependent variable (consumption per capita (ln)) | Thailand | Vietnam | ||
---|---|---|---|---|
Lag consumption per capital (ln) | 0.083*** | (0.023) | 0.081*** | (0.027) |
Covariate shock | −0.028* | (0.015) | −0.081*** | (0.019) |
Idiosyncratic shock | 0.046*** | (0.015) | −0.020 | (0.016) |
Labor diversification | ||||
Land diversification | ||||
Age | 0.003*** | (0.001) | −0.001 | (0.001) |
Ethnic majority | 0.168*** | (0.033) | 0.419*** | (0.058) |
Education | 0.043*** | (0.004) | 0.018*** | (0.002) |
Household size | −0.179*** | (0.008) | −0.212*** | (0.014) |
Household labor | 0.055*** | (0.011) | 0.059*** | (0.012) |
Farmland (ln) | 0.026*** | (0.006) | 0.032*** | (0.006) |
Tractors | 0.072*** | (0.016) | 0.070*** | (0.024) |
Motorbikes | 0.171*** | (0.011) | 0.309*** | (0.023) |
Livestock (TLU) | −0.013*** | (0.004) | −0.005 | (0.005) |
Health insurances | 0.103*** | (0.031) | 0.042*** | (0.006) |
Public transfer | −0.067*** | (0.016) | 0.345* | (0.201) |
Saving | 0.002 | (0.130) | 0.003 | (0.141) |
Credit | −0.025 | (0.110) | 0.219*** | (0.063) |
Remittances | 0.084 | (0.102) | −0.546*** | (0.137) |
Road type | −0.022*** | (0.008) | 0.049*** | (0.013) |
Distance to town (ln) | −0.014* | (0.008) | −0.004 | (0.006) |
2010 | −0.015 | (0.019) | −0.100* | (0.052) |
2013 | 0.109*** | (0.027) | 0.318*** | (0.082) |
2016 | 0.251*** | (0.028) | 0.352*** | (0.100) |
Constant | 6.576*** | (0.220) | 6.165*** | (0.233) |
Number of observations | 7113 | 7372 | ||
AR (1) test (p-value)a | 0.000 | 0.000 | ||
AR (2) test (p-value)b | 0.966 | 0.824 | ||
Hansen test (p-value)c | 0.109 | 0.144 |
5.2.2 Impact of shocks on livelihood diversification
Dependent variable (land and labor diversification index) | Thailand | Vietnam | ||
---|---|---|---|---|
Labor diversification | Land diversification | Labor diversification | Land diversification | |
(1) | (2) | (3) | (4) | |
Lag labor diversification | 0.132*** (0.026) | 0.118*** (0.024) | ||
Lag land diversification | 0.268*** (0.031) | 0.383 (0.374) | ||
Covariate shocks | 3.795*** (1.231) | 0.627 (1.263) | −5.069*** (1.957) | 5.661** (2.572) |
Idiosyncratic shocks | 0.237 (1.111) | −0.505 (1.030) | −0.977 (1.194) | −0.588 (1.166) |
Age | −0.131* (0.071) | 0.078 (0.086) | −0.072 (0.179) | 0.026 (0.054) |
Ethnic majority | 4.414 (2.751) | −4.438 (3.746) | −38.912 (24.003) | −0.742 (3.924) |
Education | 0.183 (0.264) | −0.318 (0.278) | 0.258 (0.583) | 0.532 (0.460) |
Household size | 0.492 (0.539) | −0.022 (0.402) | 0.257 (1.037) | −0.700 (0.704) |
Household labor | 6.530*** (0.811) | −0.633 (0.688) | 2.072** (1.012) | 0.019 (0.640) |
Farmland (ln) | 1.605*** (0.461) | 3.207*** (0.660) | −1.504 (1.480) | 3.945** (1.959) |
Tractors | −4.298*** (1.118) | 3.409*** (1.030) | −7.690*** (1.950) | 5.025* (2.668) |
Motorbikes | 1.992** (0.815) | −1.366 (0.897) | 6.531*** (2.011) | 1.355 (1.869) |
Livestock (TLU) | −0.484* (0.264) | 0.140 (0.253) | 5.627** (2.816) | −3.575 (3.268) |
Health insurances | 2.046 (2.320) | −2.438 (1.898) | 3.554*** (1.224) | −0.432 (0.479) |
Public transfer | −1.324 (1.256) | 0.858 (1.041) | −5.547 (3.490) | 5.142** (2.321) |
Saving | 5.784 (17.101) | 15.520 (18.878) | 8.752 (11.181) | −29.547 (28.306) |
Credit | −2.874 (10.396) | 26.828** (12.625) | 9.881** (4.748) | 13.192 (8.243) |
Remittances | −12.815 (8.828) | −7.103 (7.958) | −25.162** (11.313) | 4.683 (12.175) |
Road type | −1.410** (0.631) | −4.133*** (1.349) | −5.326*** (2.042) | −1.547* (0.818) |
Distance to town (ln) | −0.132 (0.579) | −14.264** (5.620) | −1.291*** (0.433) | −0.101 (0.442) |
2010 | 0.222 (1.718) | −0.085 (1.793) | −10.368** (4.770) | 3.449 (9.347) |
2013 | −6.331** (2.581) | 5.572* (2.902) | 7.173 (5.620) | 14.673* (8.544) |
2016 | −1.287 (2.649) | 0.854 (3.681) | −6.316 (7.347) | 13.269 (13.546) |
Constant | 27.534* (15.368) | 31.939 (28.602) | 87.121*** (19.432) | 7.578 (13.586) |
Number of observations | 7113 | 7113 | 7372 | 7372 |
AR (1) test (p-value)a | 0.000 | 0.000 | 0.000 | 0.000 |
AR (2) test (p-value)b | 0.383 | 0.901 | 0.105 | 0.344 |
Hansen test (p-value)c | 0.101 | 0.247 | 0.293 | 0.587 |
5.2.3 Impact of livelihood diversification on consumption
Dependent variable (consumption per capita (ln)) | Thailand | Vietnam |
---|---|---|
Lag consumption per capita (ln) | 0.086*** (0.024) | 0.079*** (0.029) |
Covariate shock | −0.027* (0.015) | −0.091*** (0.029) |
Idiosyncratic shock | 0.046*** (0.015) | −0.017 (0.017) |
Labor diversification | 0.001 (0.001) | −0.001 (0.002) |
Land diversification | −0.003** (0.001) | 0.002 (0.003) |
Age | 0.003*** (0.001) | 0.001 (0.002) |
Ethnic majority | 0.144*** (0.034) | 0.419*** (0.072) |
Education | 0.044*** (0.004) | 0.016*** (0.003) |
Household size | −0.181*** (0.008) | −0.208*** (0.014) |
Household labor | 0.059*** (0.013) | 0.061*** (0.015) |
Farmland (ln) | 0.034*** (0.008) | 0.026** (0.011) |
Tractors | 0.085*** (0.018) | 0.046* (0.026) |
Motorbikes | 0.171*** (0.011) | 0.303*** (0.025) |
Livestock (TLU) | −0.013*** (0.004) | −0.008 (0.010) |
Health insurances | 0.104*** (0.031) | 0.043*** (0.008) |
Public transfer | −0.062*** (0.016) | 0.250 (0.182) |
Saving | −0.018 (0.118) | 0.082 (0.129) |
Credit | 0.041 (0.089) | 0.198*** (0.068) |
Remittances | 0.111 (0.096) | −0.597*** (0.156) |
Road type | −0.025*** (0.008) | 0.041*** (0.014) |
Distance to town (ln) | −0.017** (0.008) | −0.004 (0.007) |
2010 | −0.006 (0.019) | −0.133*** (0.050) |
2013 | 0.129*** (0.026) | 0.281*** (0.086) |
2016 | 0.263*** (0.027) | 0.293*** (0.094) |
Constant | 6.565*** (0.221) | 6.218*** (0.294) |
Number of observations | 7113 | 7372 |
AR (1) test (p-value)a | 0.000 | 0.000 |
AR (2) test (p-value)b | 0.966 | 0.820 |
Hansen test (p-value)c | 0.109 | 0.322 |
Dependent variable (consumption per capita (ln)) | Land diversification | Labor diversification | ||
---|---|---|---|---|
Thailand | Vietnam | Thailand | Vietnam | |
(1) | (2) | (3) | (4) | |
Lag consumption per capita (ln) | 0.089*** (0.023) | 0.085*** (0.027) | 0.097*** (0.027) | 0.076*** (0.029) |
Covariate shock | −0.212*** (0.041) | −0.179*** (0.067) | −0.156* (0.094) | −0.292*** (0.105) |
Idiosyncratic shock | −0.036 (0.031) | −0.139 (0.101) | 0.449 (0.305) | −0.273** (0.138) |
Labor diversification | −0.000 (0.001) | −0.001 (0.002) | 0.002 (0.003) | −0.007* (0.004) |
Land diversification | −0.008*** (0.002) | −0.008 (0.005) | −0.002 (0.002) | 0.002 (0.003) |
Cov_shock * labor diversification | 0.003 (0.002) | 0.004** (0.002) | ||
Idio_shock * labor diversification | −0.009 (0.007) | 0.005* (0.003) | ||
Cov_shock * land diversification | 0.007*** (0.002) | 0.004 (0.003) | ||
Idio_shock * land diversification | 0.003*** (0.001) | 0.005 (0.004) | ||
Age | 0.003*** (0.001) | 0.001 (0.002) | −0.001 (0.003) | −0.001 (0.001) |
Ethnic | 0.139*** (0.035) | 0.372*** (0.064) | 0.230*** (0.058) | 0.425*** (0.069) |
Education | 0.041*** (0.004) | 0.017*** (0.002) | 0.039*** (0.005) | 0.016*** (0.003) |
Household size | −0.180*** (0.008) | −0.208*** (0.014) | −0.196*** (0.018) | −0.204*** (0.014) |
Household labor | 0.054*** (0.013) | 0.058*** (0.015) | 0.080*** (0.026) | 0.068*** (0.013) |
Farmland (ln) | 0.047*** (0.009) | 0.052*** (0.011) | 0.044*** (0.012) | 0.033*** (0.012) |
Tractors | 0.084*** (0.018) | 0.058** (0.027) | 0.075*** (0.021) | 0.023 (0.027) |
Motorbikes | 0.175*** (0.011) | 0.292*** (0.024) | 0.155*** (0.015) | 0.310*** (0.023) |
Livestock (TLU) | −0.012*** (0.004) | 0.008 (0.009) | −0.015*** (0.004) | −0.006 (0.010) |
Health insurances | 0.105*** (0.030) | 0035*** (0.0.07) | 0.118*** (0.035) | 0.044*** (0.007) |
Public transfer | −0.066*** (0.016) | 0.278 (0.208) | 0.217 (0.235) | 0.199 (0.187) |
Saving | −0.004 (0.119) | 0.116 (0.140) | 0.061 (0.173) | 0.064 (0.126) |
Credit | −0.025 (0.091) | 0.250** (0.108) | 0.039 (0.147) | 0.201*** (0.067) |
Remittances | 0.028 (0.097) | −0.582*** (0.148) | 0.028 (0.096) | −0.631*** (0.146) |
Road type | −0.024*** (0.009) | 0.037** (0.016) | −0.121 (0.097) | 0.034** (0.014) |
Distance to town (ln) | −0.015* (0.008) | −0.007 (0.006) | −0.181** (0.078) | −0.007 (0.007) |
2010 | −0.012 (0.019) | −0.146*** (0.051) | −0.079 (0.075) | −0.141*** (0.050) |
2013 | 0.144*** (0.027) | 0.301*** (0.102) | 0.095 (0.075) | 0.298*** (0.081) |
2016 | 0.260*** (0.027) | 0.289*** (0.099) | 0.135 (0.110) | 0.300*** (0.092) |
Constant | 6.801*** (0.238) | 6.473*** (0.360) | 6.975*** (0.408) | 6.630*** (0.369) |
Number of observations | 7113 | 7372 | 7113 | 7372 |
AR (1) test (p-value)a | 0.000 | 0.000 | 0.000 | 0.000 |
AR (2) test (p-value)b | 0.958 | 0.761 | 0.212 | 0.980 |
Hansen test (p-value)c | 0.481 | 0.144 | 0.561 | 0.437 |