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

69 Pages Posted: 29 Jun 2010

See all articles by Huong Le

Huong Le

Deakin University - Bowater School of Management and Marketing

Alison L. Booth

Australian National University (ANU) - Research School of Social Sciences (RSSS); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

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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.

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

JEL Classification: O18, O53, C13

Suggested Citation

Le, Huong and Booth, Alison L., Inequality in Vietnamese Urban-Rural Living Standards, 1993-2006. IZA Discussion Paper No. 4987, Available at SSRN: https://ssrn.com/abstract=1631122

Huong Le (Contact Author)

Deakin University - Bowater School of Management and Marketing ( email )

Victoria
Australia

Alison L. Booth

Australian National University (ANU) - Research School of Social Sciences (RSSS) ( email )

Canberra, Australian Capital Territory 0200
Australia
+61 2 6125 3285 (Phone)
+61 2 6125 0182 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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