Land Tenure Insecurity and Smallholder Income Diversification Strategies: Evidence from Vietnam’s 2013 Land Law

This paper investigates how uncertainty arising from land tenure insecurity shapes household income diversification strategies in rural Vietnam. Although a substantial body of literature examines the effects of insecure property rights on agricultural productivity and food security, relatively little attention has been given to its influence on income-based livelihood diversification. This study addresses that gap by analyzing Vietnam’s 2013 Land Law, which extended household agricultural land use rights by an additional 50 years. Using nationally representative household panel data, the analysis leverages variation in exposure to land tenure insecurity generated by the reform across households cultivating different crops. Event study regressions are used to assess how households adjust their livelihood strategies in response to land tenure uncertainty, as well as how these responses differ across household characteristics. The results indicate some evidence of income diversification prior to the reform that is mainly driven by an increased share of household labor allocated to off-farm wage labor, though the estimated effects are generally modest in magnitude. Heterogeneity analysis further shows that factors such as household distance to nearest road, member size, and farm size influence the the degree of adaptation to land tenure insecurity. Overall, the findings suggest that households respond to tenure-related uncertainty primarily by diversifying into off-farm income sources, rather than solely through on-farm intensification.