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Inequality in Vietnamese Urban-Rural Living Standards, 1993-2006

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  • Le, Huong Thu

    ()
    (Australian National University)

  • Booth, Alison L.

    ()
    (Australian National University)

Abstract

Using data from five waves of the Vietnam Household Living Standard Survey, we find evidence of significant urban-rural expenditure inequality. Urban-rural inequality in Vietnam increased dramatically from 1993 to 1998, and peaked in 2002 before reducing slightly in 2004, and significantly in 2006. The urban-rural gap also monotonically increases across the expenditure distribution. We use a variant of the Oaxaca-Blinder decomposition method, applied to the unconditional quantile regression method of Firpo, Fortin and Lemieux (2009), to explain the components of the per capita expenditure differentials between urban and rural households at selected quantiles of the distribution. We also compare these estimates with those at mean obtained by OLS. Our results show a number of factors contributing significantly to the high urban-rural gap. These include inter-group differences in education, household demographic structure, industrial structure and their related returns. Adjusting the average characteristics of rural households to those of urban households will reduce about a half of the overall urban-rural expenditure gap. A significant part of the remaining unexplained component lies in the intercept differences; that is, the inter-group differences in other factors not captured in the model that favor urban households.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4987.

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Length: 69 pages
Date of creation: Jun 2010
Date of revision:
Publication status: published in: Review of Income and Wealth, 2013, [Online First]
Handle: RePEc:iza:izadps:dp4987

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Keywords: Oaxaca decomposition; Vietnam; unconditional quantile regression; urban-rural inequality;

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References

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Cited by:
  1. Raymundo M. Campos-Vazquez & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico: 1989-2010," Serie documentos de trabajo del Centro de Estudios Económicos 2012-04, El Colegio de México, Centro de Estudios Económicos.

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