External Shocks and Household Welfare: Evidence from Vietnam

In today’s rapidly changing world, shocks have become part of lives. Households are facing unexpected events and sudden changes on a daily basis. Whether they cause positive or negative outcomes, the effects of shocks on households vary widely, depending on many factors, such as income level, education and access to resources. This thesis focuses on examining the effects of various shocks, including weather, policy and the COVID‑19 pandemic, on household behaviours in Vietnam. Chapter 2 combines a rich satellite rainfall data set with longitudinal data from the Vietnam Access to Resources Household Survey to examine the effects of weather shocks on social trust in rural Vietnam. While floods significantly increase the possibility of trust, droughts statistically reduce it. However, providing a good irrigation system that meets the water demand of households can help improve social trust during droughts. In addition, public transfers and support from relatives are found to increase social trust in the aftermath of droughts, whereas support from the Women’s Union mediates the positive effects of floods on social trust. Chapter 3 studies the effects of Land Law 2013 in Vietnam that extended land-use rights for annual crop, aquacultural land and pasture from 20 years to 50 years. The effects on household access to credit are examined. Specifically, a difference-in-difference methodology is used to identify the causal effects of the increased land tenure on households’ debt-to-income ratios. Results suggest that the extension in land usufructs has had positive effects on the loan amounts received by rural households. The results remain robust after using various definitions to construct treatment and control groups and using a full sample that has a triple difference-in-difference approach. The effect is larger for households that had no loans prior to the reform and for households in Vietnam’s Northern provinces. Chapter 4 investigates the causal relationship between home isolation because of the COVID‑19 pandemic and the consumption of demerit goods, specifically, tobacco and alcohol, in Vietnam during the first year of the pandemic (2020). Employing new COVID‑19 cases detected in communities as an instrumental variable for mobility, it is found that prolonged periods of home isolation increase tobacco consumption. The observed impact is more pronounced in households that have female and divorced heads. Further, staying at home results in less beer consumption. The study, however, finds no significant statistical impact on the intake of spirits. The findings from the thesis are valuable for policymakers to foster community trust after natural shocks, to enhance credit access in rural areas and to reduce side effects of isolation in the pandemic. They offer guidance for shaping policies to reduce negative impacts and promote positive impacts of shocks, particularly in Vietnamese context.