The effect of income shocks on migration: evidence from rural vietnam

Abstract

This study examines the effect of income shocks on migrant destinations within Vietnam on the decision of family members left behind at their places of origin to engage in domestic labour migration. Utilising data from the Vietnam Access to Resources Household Survey (VARHS) conducted by the General Statistics Office of Vietnam in 2012, 2014 and 2016, this paper establishes the microfoundations of migration decisions at the national level. Furthermore, the migration rates are estimated based on regionspecific data, revealing substantial variation across different areas of Vietnam. The empirical findings indicate that as household income improves and is accompanied by enhanced quality of life in terms of infrastructure, education, and healthcare, individuals are more inclined to become permanent migrants, settling in new locations and displaying reduced propensity for subsequent moves in the following years. Additionally, individuals are more likely to migrate in response to unexpected shocks, although this phenomenon is less prevalent compared to proactive migration driven by the desire for improved living conditions. These findings highlight the importance of understanding how daily economic shocks experienced by low-income households influence individual and household decision-making processes.