Is small beautiful? An empirical analysis of land characteristics and rural household income in Vietnam

Small and fragmented farmland parcels are widely believed to be major impediments to agricultural activities. In this study, instrumental variables models are constructed to estimate the influence of the farm size and the number of farmland plots on household welfare proxied by income and the asset index in Vietnam. The study exploits the panel data of households collected from the Vietnam Access to Resources Household Survey (VARHS) every second year in the period 2008-2014, capturing cultural, political and socioeconomic dimensions of rural Vietnam. A positive relationship was found between farm size and household economic welfare proxied by household per capita income and a household asset index; however, this relationship was negative for the number of land plots. The main conclusion from our analysis is that household welfare would be aided by land policies towards increasing the size of farmland and decreasing land fragmentation. However, our findings also indicate that to be effective, these land policies should be complemented by rural education, effective community development and encouragement of non-farm employment activities.