This paper examines and decomposes the gap in per capita expenditures between majority and minority ethnic groups in rural Vietnam between 1993 and 2004. Over this period, the expenditure gap between rural Kinh and Chinese headed households and the ethnic minorities increased by 14.6 percent. Approximately two fifths of the mean gap is found to be due to differences in household endowments, and at least half due to difference in returns to these endowments. Differences between majority and minority households' demographic structure are more important than differences in their education levels, while geographic variables explain less than one-fifth of the gap. Over half of the increase in the mean gap is found to be linked to temporal changes in unobservable factors, and less than a quarter to the Kinh and Chinese endowments improving more rapidly than those of the minorities. Broadly similar findings are detected using quantile regression analysis. Our empirical results therefore confirm the finding in the existing literature that most of the ethnic differential in household living standards in rural Vietnam is attributable not to differences in endowments but to returns to those endowments. This raises important questions concerning the drivers of the disadvantage faced by Vietnam's ethnic minorities, which we show cannot simply be attributed to their poorer endowments and residence in remote mountainous areas.
Decomposing the ethnic gap in living standards in rural Vietnam, 1993-2004.