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The effect of various income sources on income inequality: a comparison across ethnic groups in Vietnam

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Abstract

This study explores the dynamics of income and income inequality in Vietnam from 2004 to 2014. Two main population subgroups are investigated: the ethnic majority, known as the Kinh people, and the minority group, which includes 53 minor ethnicities in Vietnam. The findings show that the income gap among ethnic groups has increased over the last decade. The Gini index decomposition indicates that wages and nonfarm business income are the two main determinants of income inequality. Cultivation and agricultural side-line incomes were relatively evenly distributed, despite their recent smaller equalizing effect. Both sub-population groups have experienced a declining contribution from the agricultural sector to overall household income. Changes in income inequality in Vietnam by income source reflect the change in the structure of the economy from reliance on agriculture to non-agricultural economic activities.

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Fig. 1

Data source: VHLSS 2004–2014

Fig. 2

Source: VHLSS 2004–2014

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Notes

  1. Authors’ calculation based on data from the 2002–2014 VHLSS.

  2. Authors’ calculation based on data from the 2016 VHLSS and using the updated poverty line for the 2016–2020 period.

  3. We do not use the 2002 data as its sample size is much larger (about 30,000 households) and consists of more observations of poorer households, making it less comparable to other waves of the VHLSS from 2004 to 2014 (Doan et al. 2017).

  4. Nominal income by source across the years can be seen in “Appendix 2”.

  5. Benjamin et al. (2017) used household size as a weighting factor in estimating per capita income distribution, while our study adjusted for sampling weights. In addition, our removal of the top 1% and bottom 1% of households may result in the disparity with the other study.

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Acknowledgements

Without implications, we thank John Gibson for constructive comments and suggestions, and any remaining errors or mistakes in this paper are our own. The opinions, findings, recommendations, and conclusions expressed in this paper are those of the authors. The universities and ILO, Bangkok, Thailand, take no responsibility for content, any omissions or errors in the information contained in this paper.

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Authors and Affiliations

  1. International Labour Organization, Bangkok, Thailand

    Hien Nguyen

  2. University of Economics and Business, Vietnam National University, Hanoi, Room 100, Building E4, 144 Xuan Thuy, Cau Giay District, Hanoi, Vietnam

    Tinh Doan & Tuyen Quang Tran

  3. The University of Waikato, Hamilton, New Zealand

    Tinh Doan

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  1. Hien Nguyen
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  2. Tinh Doan
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Correspondence to Tuyen Quang Tran.

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This article does not contain any studies with human participants or animals performed by any of the authors.

Appendices

Appendix 1

See Table 6.

Table 6 Summary of the VHLSS sample
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Appendix 2

See Tables 7 and 8.

Table 7 Gini index decomposition by income source
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Table 8 Average income per household and income component by ethnicity (in thousands of VND)
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Nguyen, H., Doan, T. & Tran, T.Q. The effect of various income sources on income inequality: a comparison across ethnic groups in Vietnam. Environ Dev Sustain 22, 813–834 (2020). https://doi.org/10.1007/s10668-018-0221-0

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