Rural Income Inequality in Vietnam: What Does the New Data Set Tell Us About?

This study aims to investigate the sources of income inequality in rural Vietnam by applying both non‐regression and regression‐based decomposition approaches. These methods are used to quantify the relative contributions of various determinants to individual income and overall income inequality. The analysis draws on unique panel data from the Vietnam Access to Resources Household Surveys conducted between 2008 and 2016, which capture the diverse dimensions of Vietnam's economic transition. The main findings of this article are: (i) rural income inequality remains high despite a gradual decline; (ii) income sources from wages/salaries, agricultural activities, and public transfers tend to equalise income distribution, whereas those from household businesses and private transfers exacerbate the income gap; and (iii) from a household characteristic perspective, education and ethnicity are the primary determinants of rural inequality. These findings suggest that policymakers should provide economic incentives for the poor, particularly ethnic minority children, to improve their education and complete training programmes, thereby expanding their opportunities for labour market participation. Public transfer policies could further reinforce educational opportunities and labour market participation for the poor, ultimately stimulating the economy and contributing to a reduction in inequality within rural Vietnamese society.