Impact of Income Diversification on Vietnamese Household Welfare

This study examines the heterogeneous effect of income diversification on Vietnamese household welfare measured by total income and consumption expenditure. In the analysis, we use quantile regression for both pooled and cross-sectional data across regions. The effects from Simpson's diversity index, as the measure of income diversification, show mixed results. During the early period of study, income diversification raised the welfare of most households. However, the trend was reversed in the later period. This generates concern for low-income households and their income sources are less diversifed. While for higher-income households, the adverse effects are due to their focus on few economic activities with wage earnings being their main source of income