The effects of multiple adverse shocks on household income in rural Vietnam

Abstract

Purpose This study aims to examine the effects of multiple shocks on different types of household income in rural Vietnam, an agriculture-based developing country. Design/methodology/approach Utilizing panel data from Vietnam Access to Resources Household Survey spanning 2008–2018 and covering 15,182 observations, this study uses an ordinary least squares fixed-effects framework to control for observable characteristics while accounting for unobserved time- and province-invariant heterogeneity. Findings The findings indicate that aggregate shocks significantly reduce total household income, primarily through the contraction of non-farm earnings, as agricultural income remains relatively resilient. However, a disaggregated analysis reveals substantial heterogeneity: while natural shocks, notably typhoons, depress both agricultural and non-farm income by disrupting infrastructure, economic shocks like price volatility often trigger adaptive shifts toward non-farm self-employment. The robustness of control variables across models underscores the pivotal role of household characteristics and asset endowments. Specifically, livelihood capital, including physical assets, land, education and social networks, serves as a critical buffer, while credit access and government support further bolster household resilience. Research limitations/implications These findings highlight the need for targeted shock-specific policies to strengthen resilience and promote sustainable rural livelihoods beyond one-size-fits-all approaches. Originality/value To the best of the authors’ knowledge, this research is the first to explore the effect of diverse shocks concurrently affecting total income and its disaggregated components: agricultural, non-farm wage and self-employment earnings in rural Vietnam.