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The following paper analyses whether becoming self‐employed can help to reduce the vulnerability to poverty of rural households. We use data collected during four survey waves in three rural provinces in Vietnam to calculate region‐specific logistic panel regressions. The results show that becoming self‐employed increases the likelihood of poor households escaping poverty, but only if they are located in a regional economic environment characterized by an advanced stage of structural change, good infrastructural conditions, and proximity to markets. In less well‐developed regions, becoming self‐employed is not sufficient to increase the probability of poor households escaping poverty. What matters more is that self‐employment is driven by opportunity and not by necessity. However, even opportunity‐driven self‐employment does not guarantee a reduction of vulnerability to poverty in all regional settings and for all household types. Especially, regional overspecialization in cash‐crop production and inequality in access to assets have to be taken into account. In times of declining commodity prices, self‐employment entails a risk of business failure in regions that are overspecialized in cash‐crop production. For households whose initial investment is high and whose endowment with social and educational assets is low, this can result in increased vulnerability to poverty.
Sohns et al. (Mon,) studied this question.