Seasonal migration and improving living standards in Vietnam.

To understand whether seasonal migration has helped households in rural Vietnam increase their well-being, we use data obtained from the VLSS, conducted in 1992-1993 and in 19971998 by the World Bank in collaboration with the Vietnam State Planning Committee and the General Statistical Office. The VLSS is a comprehensive nationwide survey consisting of two main parts: a household survey and a commune-level survey. The household survey collected information on multiple aspects of living conditions, including individual-level education, off-farm employment, on-farm labor, and migration, as well as household demographics, housing conditions, assets and expenditures, and income sources. Anthropometric information was also collected from almost all household residents. To investigate migration behavior by households, we used a specific module asked in both surveys about seasonal migration. This module also asked whether people were born outside of the commune they were living in. (10 The commune-level survey provided further information on local living conditions. For this article, we used several parts of the commune-level survey, including information on the proportion of the commune workforce that was migrating in 1992-3, the distance of the commune from market centers and roads, and measures of general commune economic characteristics.

The 1993 and 1998 surveys have quite different sample sizes and geographic compositions. (2) The sample of 4,799 households in the 1993 survey was chosen to be nationally representative and self-weighting, but the 6,000 households in the 1998 survey include over 1,500 households that were added from another survey to increase the sample size (World Bank 2001). For this article, we construct a panel of the 3,492 rural households included in both surveys. Since the 1993 sample is self-weighting, our sample can be considered self-weighting if sample attrition can be considered random. Of the rural households surveyed in 1993, 344 were not resurveyed in 1998, and three other households were dropped because of incomplete records. The attrition rate of 9% is quite low for a panel survey in a developing country (e.g., Thomas, Frankenburg, and Smith 2001). However, since attrition was not randomly distributed across communes or regions, we test whether attrition affects our econometric results.

We use per capita expenditures as our primary measure of household well-being. Total household expenditures are calculated by summing consumption expenditures on food, the value of home-produced food, nondurable and nonfood goods, the estimated rental value of durable goods, the estimated rental value of the dwelling, and the value of in-kind transfers from off-farm employers. We then divide by the total number of household members, including seasonal migrants, to come up with per capita household expenditures.

To ensure that our calculations are comparable across regions and over time, the values of food and nonfood expenditures were separately adjusted for both regional and timing differences in the survey. Both surveys collected commune level prices, which were aggregated to regional indices based on average budget shares for consumption goods. Expenditures were also adjusted for the differential timing of the survey, using a monthly consumer price index. To make prices comparable in the two surveys, adjusted prices for the 1993 survey were inflated to January 1998 levels. Therefore, all monetary values in this article are expressed in thousands of January 1998 Vietnamese dong. (3)

Measuring the Increase in Household Well-Being

According to the VLSS, economic growth in Vietnam translated to increased living standards for most rural households. Whereas the median per capita expenditure level was 1,506 thousand dong in 1993, in real terms median household per capita expenditures had increased to 2,015 thousand dong by 1998, or 33%. Although many transition countries have experienced increased inequality along with economic growth, descriptive statistics on relative inequality in rural Vietnam show little change. The Gini coefficient for per capita household expenditures was 0.269 in 1993, and only increased to 0.28 in 1998. Vietnam's rural households, then, seem to have become better off without experiencing the expected increase in inequality for Vietnam's level of development (Kuznets 1955).

Households did not necessarily maintain the same position in the income distribution between 1993 and 1998, as some households benefitted from economic growth more than others (Glewwe and Nguyen 2004). To assess differences in household performance over the sample period, we calculate an annualized expenditure growth rate for each household, as the difference in the logarithm of per capita expenditures over the time between the two surveys. The average per capita expenditure growth for sample households is 5.7% per annum.

The kernel density of expenditure growth rates shows there is a great deal of variation among household expenditure growth rates (figure 1). Although the sample standard deviation is 0.084, over half the variation in per capita expenditures can be attributed to measurement error (Glewwe and Nguyen 2004). As a result, only a portion of the variation found in the data reflects true differences in expenditure growth. Measurement error in expenditures may have two different effects on our results. First, since expenditure growth is negatively correlated with initial expenditures, the measurement errors are likely to be both serially and negatively correlated, or mean reverting. Mean reverting measurement error that is not otherwise related to other variables affecting seasonal migration and expenditure growth would cause an underestimate of the effect of migration on expenditure growth (Bound and Krueger 1991; Kim and Solon 2005). However, the portion of measurement error attributable to food expenditures is likely correlated with household size (Gibson 2002). Since migrants tend to come from larger households, we must also ensure that our results are robust to measurement error in food expenditures.

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Measurement error is not the only reason that per capita expenditures are not an ideal measure of household well-being. Per capita expenditures attribute the same amount of consumption to each household member, ignoring that children consume less than adults, and that economies of scale exist in household consumption (e.g., Deaton and Paxson 1998). Furthermore, measures of monetary and nonmonetary poverty do not fully overlap in the VLSS (Baulch and Masset 2003).

Therefore, we test whether our results are robust to three alternative measures of household well-being. First, we replace per capita expenditures with nonfood expenditures. Although eliminating food expenditures from the measure removes the potential correlation between measurement error and household size, it could mismeasure the effect of migration on household well-being, as migrant households may choose to consume more nonfood goods than nonmigrant households for other, unobservable reasons. Second, we check whether our results are robust to measuring well-being with expenditures per adult equivalent, counting each child as half an adult and using a scale parameter of 0.9, as recommended by Deaton and Zaidi (2002) for developing countries. Third, we test whether our results are robust to using height-for-age z-scores among children aged one through ten in 1993 as a proxy for well-being, since they are a good indicator of children's well-being over long time periods, and measure the stock of investments made in children's nutrition (WHO 1986). Though we must drop a large portion of the sample to use z-scores, they provide an additional measure of household welfare improvement that does not suffer from potential measurement error bias as do the expenditure-based measures.

Seasonal Migration in Vietnam

The VLSS show that from a very small base, seasonal migration increased nearly sixfold between 1993 and 1998. We define seasonal migrants as household members who left the household for part of the year to work, but are still considered household members. (4) Typically, these migrants indicated that they were away between busy seasons on the farm. The destination for a sizable proportion of seasonal migrants is either Hanoi or HCMC; over one third of the migrants in 1998 migrate to one of the two big cities. We will use this fact in our identification strategy.

The aggregate number of households in the panel sending out seasonal migrants increases from 65 in 1993 to 369 in 1998 (table 1). Migrant households are generally from communes in specific geographic areas. In 1998, over 20% of households in coastal areas and "hills/midlands" had at least one seasonal migrant (rows 4 and 6). In contrast, few migrants left high mountainous areas; only 2.4% of rural households had a migrant in 1998. The lack of mobility in high mountainous areas is likely due to underdeveloped transportation networks and limited off-farm employment opportunities.