Income diversification is an important livelihood strategy of households, especially the poor and rural ones. This research employs data from Vietnam Household Living Standards Survey 2008 to identify factors that affect household income and its impacts on decisions to diversify the income by households in the Mekong Delta. | ECONOMIC DEVELOPMENT No. 204, August 2011 INCOME DIVERSIFICATION OF HOUSEHOLDS The Case of the Mekong Delta by HUYØNH TRÖÔØNG HUY* Income diversification is an important livelihood strategy of households, especially the poor and rural ones. This research employs data from Vietnam Household Living Standards Survey 2008 to identify factors that affect household income and its impacts on decisions to diversify the income by households in the Mekong Delta. Analyses show that householder’s characteristics, such as age and schooling years, have positive effects on the household income. Meanwhile, households that are large and in urban areas enjoy more opportunities to improve and diversify their income than rural and small households. More importantly, diversifying the income through migration is considered as a livelihood strategy for poor households. Finally, income gaps also drive households to diversify their income by seeking jobs outside their home districts. Keywords: household, estimated income, income diversification 1. Introduction Income diversification – mostly from farming to non-farming businesses – has long been a concern for many families, especially the poor and rural ones. Diversification is evident in increases in income-generating activities and the importance of these activities. For example, a two-income household is considered as more diversified than a one-income one (Joshi, Gulati, Birthal, & Twari, 2003). Besides farming business, workers can engage in income-generating non-farming activities inside or outside their home districts. Income diversification has long been considered as an important livelihood strategy to stabilize the income in changing situations such as urbanization, industrialization, influence of climate change, and income gap between agricultural and manufacturing sectors, etc. (Ellis, 1998; Huyønh Tröôøng Huy, Nghieâm, & Nam, 2008; and Yang & An, 2002). Statistics from many countries show that income diversification by .
