Factors associated with the degree of livelihood diversification among Vietnamese households: Evidence from VHLSS 2024

Abstract

This study analyzes factors associated with the degree of livelihood diversification among
Vietnamese households using data from the 2024 Vietnam Household Living Standards Survey.
Livelihood diversification is measured by the normalized Simpson Index of Diversity (SID), which
captures both the number of livelihood sources and the distribution of income across them. The sample
comprises 9,017 households for which the SID could be calculated. Because the SID ranges from 0
to 1, a fractional logit model incorporating the survey design is used as the primary estimator, while
fractional probit and OLS models are employed for robustness checks. The results indicate an inverted
U-shaped relationship between the household head's age and the SID. The SID tends to be higher
among households whose heads are members of ethnic minorities, households with more members,
and households that own land or have larger landholdings; it tends to be lower among female-headed
households, households with higher dependency ratios, and households whose heads have a university
degree or higher. No clear statistical evidence is found of associations between physical assets, Internet
use, area of residence, and the SID. The findings suggest that livelihood diversification is linked to the
structure of household resources and does not necessarily imply higher well-being.