UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM ERASMUS UNIVERSITY ROTTERDAM INSTITUTE OF SOCIAL STUDIES THE NETHERLANDS VIETNAM – NETHERLANDS PROGRAMME FOR M A IN DEVELOPMANT ECONOMICS THE EFFECT OF[.]
UNIVERSITY OF ECONOMICS ERASMUS UNIVERSITY ROTTERDAM HO CHI MINH CITY INSTITUTE OF SOCIAL STUDIES VIETNAM THE NETHERLANDS VIETNAM – NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMANT ECONOMICS THE EFFECT OF LAND FRAGMENTATION ON HOUSEHOLD INCOME IN VIETNAM, USING VARHS2018 MASTER OF ARTS IN DEVELOPMENT ECONOMICS By DOAN MINH THUY Academic Supervisor Dr LE VAN CHON Ho Chi Minh City, November 2022 University of Economics International Institute of Social Studies Ho Chi Minh City, Vietnam The Netherlands VIETNAM – NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMANT ECONOMICS THE EFFECT OF LAND FRAGMENTATION ON HOUSEHOLD INCOME IN VIETNAM, USING VARHS2018 A thesis submitted in partial fulfillment of the requirement for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By DOAN MINH THUY Academic Supervisor Dr LE VAN CHON Ho Chi Minh City, October 2022 ABSTRACT The purpose of this study is to investigate the effect that land fragmentation has on the revenue earned per person as a result of agricultural activities, as reported by the Vietnam Access to Resources Household Survey 2018 In addition to the land fragmentation index and factors related to soil quality (fertility, slope), the study investigates the impact of factors related to education and factors related to households, such as household size, marital status, or age of the household head These factors are added to the model in order to determine the impact on the variable that is being studied, which is the land fragmentation index Using the Cobb–Douglas production formula and the IV Test model to test the relationship between the independent variables and per capita income, the research results once again confirm the negative impact that land fragmentation has on income from agricultural activities per capita Both of these models are based on the idea that there is a relationship between the independent variables and per capita income On the other hand, there is no evidence to demonstrate that having a professional education has any effect on income Keywords: Land Fragmentation, Agriculture Income, Household i ACKNOWLEDGEMENT It is regrettable that it took me so long to finish this thesis Throughout my master’s degree in Development Economics, I always received encouragement, inspiration, and a great deal of patience First, I would like to express my deep gratitude to my supervisor, Dr Le Van Chon He was the one who assisted me in selecting my research topic and patiently followed and guided me over the course of two years to complete my thesis Thank you, Dr Truong Dang Thuy, for your enthusiastic support when I struggled with the next data processing step and your strict requirement for the thesis In addition, I am grateful to Mr Do Huu Luat, who gave me access to the dataset utilized in this thesis I would like to express my gratitude to my parents, who always choose to love, support, and trust in me Thanks to my friends, who remind me not to give up, support me with all my listening, and encourage me when I truly feel like giving up Lastly, I want to thank myself for deciding to persevere ii Table of Contents ABSTRACT i ACKNOWLEDGEMENT ii LIST OF TABLES iv LIST OF FIGURES v CHAPTER INTRODUCTION 1.1 Research Background 1.2 Research Objectives 1.3 Scope of study 1.4 Research Structure CHAPTER LITERATURE REVIEW 2.1 Definitions 2.2 Land fragmentation indices 2.3 Effects of land fragmentation 2.3.1 The effect of land fragmentation on agricultural production 2.3.2 The effect of land fragmentation on household income 11 2.4 Summary and conceptual framework 12 CHAPTER RESEARCH METHODOLOGY 14 3.1 The situation of land fragmentation in Vietnam 14 3.2 Econometric models 17 3.2.1 Measuring land fragmentation 17 3.2.2 Estimating the effect of land fragmentation on household income 17 3.3 Data 18 3.3.1 Vietnam Access to Resources Household Survey (VARHS) 18 3.3.2 Data for the study 20 3.3.3 Research sample 21 3.3.4 Data analysis 22 3.4 Methodology 22 CHAPTER RESULTS 25 4.1 Descriptive Statisitcs 25 4.2 Regression Results 33 CHAPTER CONCLUSION 38 5.1 Conclusion 38 5.2 Limitation of study 39 REFERENCES 41 APPENDIX 45 iii LIST OF TABLES Table Page Table 1: Cost and Benefit of land fragmentation 15 Table 2: Descriptive Statistics 25 Table 3: Mean of variables follow regions 26 Table 4: Autocorrelation test 34 Table 5: Result when regression with all observation 35 Table 6: First-stage regression summary statistics 36 iv LIST OF FIGURES Figure Page Figure 1: Plots per using purpose 22 Figure 2: Households in Regions 26 Figure 3: Labors in Household 27 Figure 4: Literacy of Household Head 28 Figure 5: Household size in regions 29 Figure 6: Scatter of Land Fragmentation and Region 30 Figure 7: Scatter of Land fragmentation index and log of agriculture income 30 per capita Figure 8: Livestock status and Marital status in regions 31 Figure 9: Scatter of labors in household and log of agriculture income per 32 capita Figure 10: Scatter of age of household head and log of agriculture income per capita v 32 CHAPTER INTRODUCTION 1.1 Research Background The fragmentation of property, the accumulation of land, and productivity are all subjects that have been the focus of discussion in several different research papers Many of them were concerned with the relationship between the variables, and this was partly due to the different performances In relation to land characteristics like fragmentation, soil fertility, and yield, there have been discovered some inconsistencies There have been some previous investigations carried out in Vietnam about land fragmentation and land consolidation (Pham et al., 2007; Tran and Vu, 2019; Markussen et al., 2016; Nguyen et al., 2020) In investigations carried out by the World Bank (2016), more than a few authors have investigated the impact of two factors: land fragmentation and the effects of the process of land consolidation It is interesting to note that they discover a direct connection between the splintering of land and decreased production The authors have conducted research on how work is divided up They reasoned that if they switched to more profitable crops and increased their use of machinery, they would be able to reduce their labor requirements and free up more time to devote to activities that were not related to farming They saw that a correlation exists between the amount of labor put into farming and the fragmentation of land However, there has been no success in establishing a connection between land fragmentation and employment in non-agricultural sectors; this may suggest that labor markets in rural areas are not well developed, and that the labor market is not well developed The primary source of income for rural residents in rural areas is agricultural produce (cultivation, livestock, aquaculture), which leads to the idea that fragmented land may influence agricultural income and then lead to affect total household income In this investigation, the index for fragmented land was computed, and the income from agriculture was measured to determine the connection between the two factors The assumption underlying this test was that the fragmentation of land would have a negative impact on the outcome of production (the final income) It was recognized by the outcome, which also demonstrated that there is a relationship that is statistically significant between these two variables In addition, the discussion portion of this research referred to other aspects, such as technological considerations or the planning involved in government involvement 1.2 Research Objectives In rural areas in Vietnam, the main economic activity that generates household income comes from farming and animal husbandry There have been several studies on the relationship between fragmented land and agricultural productivity in Vietnam or the impact of fragmented land on many aspects of Vietnam However, most of the above studies have not considered the index directly related to people's quality of life, which is per capita income from the household The aim of this study is to assess not only the link between farm household income and land fragmentation in some regions of Vietnam but also to assess other socioeconomic characteristics of households This study updates the effect of land fragmentation on a more recent data set and its direct effect on income as this is the variable that best represents the outcome of production agricultural activities Besides, the study also examined the influence of demographic and educational characteristics that have a significant effect on household income 1.3 Scope of study Numerous studies have been conducted to investigate the effects of land fragmentation on a variety of factors, including levels of poverty, total income, and levels of production The goal of this study is to make use of a specialized dataset on rural Vietnam in order to produce some results that can be directly used for the process of rural development in Vietnam since land use and apply policies that affect demographics and educational attainment The purpose of this study is to produce some results that can be directly used for the process of rural development in Vietnam 1.4 Research Structure The following is a breakdown of the paper's structure The research background and scope of study are provided in Chapter – Introduction The theories and discoveries regarding land fragmentation and its effects are presented in Chapter – Literature Review The study methods and data are covered in Chapter The analyses' findings are given in Chapter Chapter closes with findings, study limitations, and recommendations for further research CHAPTER LITERATURE REVIEW This chapter focuses on introducing the definition of land, fragmentation, the theory of land fragmentation, and some studies on the impact of land fragmentation on household income The definition of land and fragmented land is introduced in section 2.1, section 2.2 discusses the impact of land fragmentation on agricultural and economic output, section 2.3 deals with theories on the impact of land fragmentation and finally, 2.4 introduces methods for calculating the land fragmentation index 2.1.Definitions Land is a finite, usable resource that provides a source of livelihood and financial security that is passed down through generations and transformed into wealth (Ellis, 1992) According to Hartvigsen (2014), there are two fundamentally different aspects of agricultural land allocation, namely the dispersion of ownership and the dispersion of land use In both developed and developing nations, agricultural production, and the ability of many people to make a living are intrinsically linked to land Because of this, academics and those who make policy are always interested in the efficient distribution and utilization of land resources Because of this, access to land fragmentation measurement and analysis is afforded a substantial and materially rich foundation The term, "fragmentation", refers to a splitting up of a previously integrated production process into two or more components, or "fragments" (Jones R W.,2000) Land fragmentation is defined as a situation in which a farm consists of several parcels of land that are spatially separated (Binns, 1950; King and Burton, 1982; Blarel et al., 1992, Pham et al., 2007) McPherson (1982) argued that land fragmentation is the practice of farming a number of spatially separated plots of owned or rented land by the same farmer (cited in Veljanoska, 2018) According to Van Dijk (2003), The fragmentation of land typically involves the parceling (a physical characteristic) and or legal claims on land (invisible), two theoretically distinct layers The fragmentation can be evaluated on numerous scales The scale establishes what constitutes "the whole." This research employs four types of land fragmentation: (1) fragmentation of land ownership, (2) fragmentation of land use, (3) fragmentation within a farm, and (4) separation of ownership and use There are several positive effects of fragmentation In addition to ecological and aesthetic benefits, farming fragmentation can be valued for its ability to reduce the likelihood that all crops will be destroyed by disease or