TY - JOUR

T1 - The Role of Savings and Income Diversification in Households’ Resilience Strategies

T2 - Evidence from Rural Vietnam

AU - Do, Manh Hung

N1 - Funding Information: The author would like to thank the respondents from the surveyed provinces for their friendly support and collaboration. Besides, I highly acknowledge the financial support of the German Research Foundation (DFG—FOR 756/2) for the TVSEP project and the effort of our colleagues at the Leibniz University Hannover for data collection and cleaning. I would also like to thank the German Academic Exchange Service (DAAD) for financial assistance. Valuable comments and suggestions from Prof. Ulrike Grote and PD Dr. Trung Thanh Nguyen are gratefully acknowledged. I greatly acknowledge the constructive comments and suggestions from the Editor and two anonymous reviewers.

PY - 2023/8

Y1 - 2023/8

N2 - Understanding households’ resilience-building strategies is vital for the domains of humanitarian assistance, economic development, and poverty reduction, especially in the places where are vulnerable to shocks. In this study, we offer the first trial that takes into account the correlation between households’ risk attitude and their resilience-building strategies, namely savings as an absorptive capacity and income diversification as an adaptive capacity. We examine the effects of these resilience strategies on reducing the impacts of shocks and poverty. We use a panel data of 1227 identical households for Vietnam in two waves of the Thailand–Vietnam Socio-Economic Panel project to investigate the above issues. We address the endogenous problems of households’ risk attitude, savings, and income diversification. Our results show that more risk-averse households tend to save more and diversify their income portfolios. These precautionary strategies to build up their resilience capacity help prevent them from reducing consumption caused by shocks and from falling into poverty in absolute, relative, and multidimensional measures. We suggest that rural development policies in developing countries should focus on facilitating more income generation and employment opportunities. Furthermore, the development of rural education and infrastructure for information and communication technology should be taken into account of designing poverty reduction programs.

AB - Understanding households’ resilience-building strategies is vital for the domains of humanitarian assistance, economic development, and poverty reduction, especially in the places where are vulnerable to shocks. In this study, we offer the first trial that takes into account the correlation between households’ risk attitude and their resilience-building strategies, namely savings as an absorptive capacity and income diversification as an adaptive capacity. We examine the effects of these resilience strategies on reducing the impacts of shocks and poverty. We use a panel data of 1227 identical households for Vietnam in two waves of the Thailand–Vietnam Socio-Economic Panel project to investigate the above issues. We address the endogenous problems of households’ risk attitude, savings, and income diversification. Our results show that more risk-averse households tend to save more and diversify their income portfolios. These precautionary strategies to build up their resilience capacity help prevent them from reducing consumption caused by shocks and from falling into poverty in absolute, relative, and multidimensional measures. We suggest that rural development policies in developing countries should focus on facilitating more income generation and employment opportunities. Furthermore, the development of rural education and infrastructure for information and communication technology should be taken into account of designing poverty reduction programs.

KW - Absorptive capacity

KW - Adaptive capacity

KW - Instrumental variables

KW - Panel data

UR - http://www.scopus.com/inward/record.url?scp=85160331857&partnerID=8YFLogxK

U2 - 10.1007/s11205-023-03141-6

DO - 10.1007/s11205-023-03141-6

M3 - Article

AN - SCOPUS:85160331857

VL - 168

SP - 353

EP - 388

JO - Social indicators research

JF - Social indicators research

SN - 0303-8300

IS - 1-3

ER -