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Discussion of

Land reforms, labor allocation and economic diversity:

evidence from Vietnam

Author: Huy Nguyen

Discussant: Thang Vo

PhD candidate at the Arndt-Corden Department of Economics

Crawford School, ANU

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Outline

Summary

Evaluation

Consideration

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Summary

Aim: examining the impact of land fragmentation on economic diversity

of farm households in Vietnam.

Theoretical work: Add land consolidation parameter (α), which is used

as efficiency of labor use on the plot, into models of Acemoglu (2010)

and Jia and Patrick (2013) to build a model estimating the impact of

technical improvement on labor allocation (under 2 assumptions: Hicks

neutral technical change and Factor biased technical change).

Findings:

-  Technical change is Hicks-neutral: land consolidation may increase

farm labor supply.

-  Technical change is factor-biased: land consolidation may reduce farm

labor supply and release labor to nonfarm activities.

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Summary

Empirical work: Using a panel data from VHLSS 2004-2006 (4193

hhs) to examine the impact of land fragmentation on farm labor demand

and non-farm activities.

Apply Jolliffe (2004): farm households having at least one member who

describes the main jobs as farming and having positive farm profits.

Households with no annual crop outputs were excluded (around a half of

the initial data, 2179 hhs)

Method: First difference method and Munlak fixed effects; Double

hurdle model and Wooldridge (1995)

Findings: Land consolidation will reduce farm labor supply, labor

intensity and improve farm profits and productivity; land consolidation

may also release labor to nonfarm sectors and raise nonfarm profits.

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Contribution

Combine a theoretical model and empirical estimations in a single

paper.

Deep understanding the research problem and the background of

Vietnam. Hence, the research questions are interesting and

important.

Technical change Agricultural efficiency Labor allocation &

Non-farm income

The first empirical paper to estimate the impact of land

fragmentation on labor supply and nonfarm outcomes in Vietnam.

Various methods for empirical estimations and tests

Many Many

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Consideration

1. Economic interpretation of the condition?

2. Simultaneity bias: Labor supply and farm outcomes may affect

Simmons index and number of plots.

3. Why not other land fragmentation indexes: Januszewski index? The

global land fragmentation index (GLFI)?

Demetriou et al. (2012): “Existing land fragmentation indices are poor since

they only take a small number of relevant factors into account. In addition,

the factors are generally given equal importance, which is not a reasonable

assumption in most cases, and there is little flexibility for the planner

regarding which factors should be taken into account for a specific project”

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Consideration

4. Why use log of number of plots when many others use number of

plots? Why choose households having annual crop outputs instead of

households having land?

5. Mean results for the whole sample. What if you estimate the impact

on groups of households depending on types of production

(livestock, rice and others)?

6. Use more outcomes to interpret more about the impact of land

fragmentation (ex: fertilizer cost, seed cost, pesticide cost, fuel cost

intermediate consumption cost, hired labor cost, wheat yield, milk

yield, gross product, gross margin, operating surplus, pre-tax

profit…)

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Thank you for listening