Download miễn phí Patterns of household consumption in vietnam



TABLE OF CONTENTS
 
 
CHAPTER 1: INTRODUCTION 1
1.1 The relevance of the thesis 1
1.2 Focus and scope of the thesis 2
1.3 Methodology 3
1.4 Data sources 3
1.5 Structure of the thesis 3
CHAPTER 2: THEORETICAL FRAMEWORK 5
2.1 Concepts and definitions 5
2.1.1 Household 5
2.1.2 Consumption 6
2.2 Consumption theories 6
2.2.1 Keynes’ consumption function 6
2.2.2 Fisher’s intertemporal choice model 8
2.2.3 Modigliani’s life-cycle hypothesis 10
2.2.4 Friedman’s permanent-income hypothesis 13
2.2.5 Hall’s random-walk hypothesis 15
2.3 Empirical study review 16
2.4 Chapter remarks 18
CHAPTER 3: AN OVERVIEW OF HOUSEHOLD CONSUMPTION IN VIETNAM 20
3.1 Characteristics of household in Vietnam 20
3.2 Household consumption in Vietnam in 2002 21
3.2.1 Household consumption by household income 21
3.2.2 Household consumption by region and quintiles 22
3.2.3 Household consumption between urban and rural area 24
3.2.4 Household consumption by household size and number of children 25
3.2.5 Household consumption by household head’s education 26
3.2.6 Household consumption and head’s age and gender 27
3.2.7 Household consumption by occupation of household head 29
3.3 Chapter remarks 29
CHAPTER 4: MODEL SPECIFICATION AND EMPIRICAL RESULTS 31
4.1 Model specification 31
4.1.1 Econometric formulation 31
4.1.2 Variables 32
4.1.2.1 Dependent variable 32
4.1.2.2 Explanatory variables 32
4.2 Data and estimation procedure 36
4.2.1 Data description 36
4.2.2 Estimation procedure 39
4.3 Estimation results 39
4.4 Chapter remarks 44
CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 45
5.1 Conclusions 45
5.2 Recommendations 46
5.3 Limitations and suggestion for further studies 47
Bibliography 48
Appendix 51
 


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e goods and adjusted to price differences among regions and to inflation. In analysis, household consumption is calculated from VHLSS 2002 data set and grouped in 5 quintiles that represented for 5 groups of household in different economic situation. Household consumption is measured in thousand VND per year.
Household consumption by household income
As throughout analyzed in theoretical chapter, household consumption always depends on household income. In other words, household consumption is positively related to household income. Once again, it is true when examining household consumption in Vietnam. Statistical results from VHLSS 2002 data set are shown in table 3.1.
In the first quintile, household consumption accounted for 4,975 thousand VND per year where as household income was 6,671 thousand VND per year or household consumption took a share of 0.74 of household income. Household consumption increased as household income rise across quintiles. Interestingly, the share of household consumption on household income did not increase as income rise. This share fallen from 0.746 in the first quintile to 0.75 in the forth quintile. It is slightly higher (0.737) in the fifth quintile. This finding is consistent with Keynesian consumption model, which stated that as income rise, household would save a greater and greater fraction of their income, it would, in turn, reduce fraction of their consumption. To examine magnitude of consumption fraction to income in the whole data set, quantitative model in the next chapter will bring a full-sided analysis.
Table 3.1: Household consumption and HH income by quintiles (’000 VND/year)
Consumption quintile
Consumption
Income
Consumption/ Income
1st quintile
4,975.41
6,671.02
0.746
2nd quintile
8,246.56
11,215.19
0.753
3rd quintile
10,921.68
14,995.82
0.728
4th quintile
14,895.84
20,823.29
0.715
5th quintile
28,558.61
38,742.77
0.737
Source: Author’s calculation from VHLSS 2002
Household consumption by region and quintiles
To examine the pattern of household consumption in Vietnam across region, some descriptive analysis was done basing on VHLSS 2002 data set with 22,462 observations. The result shows that consumption level of household living in the South was highest (16,764.90 mill VND per year), that of household living in the North was lowest (11,800.80 mil VND per year) and consumption of household living in the Central was in the middle (11,968.5 mill VND per year).
This thesis also applies cluster methodology by using quintile of consumption level for each region. The obtained results partly answer to the question about geographic impact on consumption level. Table 3.2 reveals differences in consumption level across regions, the North, the Central, and the South of Vietnam.
The lowest and the highest consumption quintile show clearly this difference. In the first quintile, consumption level of household in the North accounted for about 4,984 thousand VND per year, that of household located in the South reached 5,113 thousand VND per year, whereas consumption level of household in the Central was only 4,878 thousand VND per year.
There is a similar picture for consumption level of the highest quintile. Household consumption level in the North, the Central, and the South respectively was 26,965 thousand VND per year, 26,613 thousand VND per year and 30,151 thousand VND per year.
Table 3.2: Household consumption by regions and quintiles (’000 VND/year)
Consumption quintile
North
Central
South
1st quintile
4,984.385
4,877.992
5,113.045
2nd quintile
8,238.136
8,217.052
8,293.896
3rd quintile
10,893.83
10,914.62
10,963.39
4th quintile
14,832.50
14,832.92
14,995.8
5th quintile
26,964.92
26,613.46
30,151.03
Source: Author’s calculation based on VHLSS 2002 data set
In overall, five consumption quintiles display a apparent distance of consumption level of household living in the South with that of household living in two other regions. It can be explained by following reasons:
In the North, especially in the Northeast and the Northwest regions, a large number of household is living in poor infrastructure such as having bad accommodation, using unpurified water, lighting by petrol in stead of electricity. Thus consumption level of household in these regions is certainly lower than that of household in region with good infrastructure like in the South where gather large industrial zones and processing zone.
Household in the Central also consume less than household in the South because in the Central, household often faces with natural disaster (flood, storm). These events force Central household have to make forward-looking decision. Maintaining a certain saving by consume less in a given budget constrain is the best way. This is accompanied by PIH hypothesis shown in the previous chapter.
People in the South have a more generous perception and habit in consumption partly because services sector in this region is more active to satisfy wants and needs of household. Moreover, life in the South is apparently more modern than in other regions resulting from historical inheritance.
Thus, it is reasonable to expect that household living in the South has higher level in both autonomous consumption and MPC than household living in the North and in the Central. However, the comparison of consumption level of household in the North and in the Central does not show clear relation. This will be further studied in the next chapter.
Household consumption between urban and rural area
In many developing countries, income, expenditure and consumption of household located in urban area is often higher than that of household in rural area. Vietnam is not exclusion. According to VHLSS 2002, consumption level of household located in urban area (20,661 thousand VND per year) is nearly double that of rural household (11,348 thousand VND per year).
It can be explained by following reasons:
in rural area, making businesses and finding jobs is more difficult due to unfavorable location, lower quality of human capital (e.g. knowledge, skills and chance to access to information) As a result, household income could be lower. This is similar to findings of Vu P.H.D. (2000).
most of rural household’s income comes from agriculture, aquaculture, and sylviculture which faces with vulnerable conditions and
general living standard in rural area is lower than that in urban area.
This argument is further supported as shown in table 3.3 where difference in consumption is more substantial across consumption quintiles.
Table 3.3: Household consumption by rural/urban and consumption quintiles (’000 VND/year)
Consumption quintile
Urban
Rural
Discrepancy
1st quintile
4,988.045
4,974.353
14
2nd quintile
8,305.059
8,239.13
66
3rd quintile
11,058.68
10,893.74
165
4th quintile
15,167.5
14,789.15
378
5th quintile
31,677.41
25,119.95
6558
Source: Author’s calculation from VHLSS 2002
In overall, figures in above table are consistent with the idea of household in urban area consume more than that in rural area. It can be also observed that the discrepancy of household consumption level in each quintile increases gradually. Surprisingly, the difference in the 5th quintile reaches 6,558 thousand VND per year.
Base on these stylized facts, it can be expected that household’s consumption level in the urban area is greater than that of household in rural area. Linear model regression is used in testing this hypothesis in chapter 4.
Household Consumption by household size and number of children
A fact that cannot be denied is increase in household member induces household consumption expansion. Event the member is adult or children the household must use a larger share of income to satisfy, at least, his necessity need. Appendix 4.2 strongly supports to this idea. If a family consisted of only one member, its consumption level was 4,481 thousand VND per year. Household consumption gradually in creased long with household size. It reached a peak of 38,034 thousand VND per year for households of 14 members. Household included 15,17 and 18 persons occurred only one time for each in the data set. Thus theirs consumption level consider to be unidentical result. In brief, higher household consumption level is always associated with larger household size. However, to that extent does the household size affect to consumption level, it need to be further analyzed in the next chapter where quantitative model is used.
There is similar picture when examining relationship between number of children and household consumption. The higher number of children, the larger household consumption level. Evidence illustrated in Appendix 4.3 where household consumption in the families without children was about 12,767 thousand VND per year, with one child it accounted for 14,593 thousand VND per year and so on. Especially the household with 9 children, consumption level...

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