Abstract

Using a novel data set from my household survey in a sub-urban district of Hanoi, Vietnam, this study is the first attempt using an econometric approach to investigate the relationship between farmland loss (due to urbanization and industrialization) and households’ livelihood strategies. The results from the multinomial logit model provide the first econometric evidence that land loss increases with the probability of households adopting a strategy specializing in a single nonfarm activity (informal paid jobs or household businesses) or diversifying in many activities. This suggests that many households have actively coped with the shock of losing land. Such adaptation strategies in the new context can help mitigate their dependence on farmland as well as might help improve their welfare. Therefore, a possible implication here is that the rising of land loss should not be seen as an absolutely negative phenomenon because it can improve household welfare by motivating households to change or diversify their livelihoods. Besides, some household asset-related variables such as education, farmland, and the prime location of houses were found to be closely associated with participation in nonfarm activities. Based on evidence from the econometric analyses, the study proposes some policy recommendations that may help households diversify or specialize in lucrative nonfarm activities, given the context of shrinking farmland due to rapid urbanization in Hanoi’s sub-urban areas.

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