Household Income, Poverty and Natural Disasters in Rural Vietnam: Preliminary Studies on the Endogeneity Problem

Abstract

This paper clarifies the influence of natural disasters on household income and relations with poverty in rural Vietnam. Vietnam is a country with many natural disasters like Japan. Therefore, the effects of natural disasters on the household welfare in rural areas where many poor people stay are concerning point for many researchers. Arouri et al. (2015) analysed this problem using household level microdata, VHLSS (Vietnam Household Living Standards). However, their analysis shows only the average impact that natural disasters have on household incomes and the influence on the income distribution is not captured. Therefore, we verified the effect on the income distribution using quantile regression method. As a result, it was found that drought has a relatively great influence on low-income groups. However, the estimated impact of natural disasters might be biased due to endogeneity. We analysed the effects of these natural disasters considering endogeneity bias although they are preliminary because panel data was not available.