Abstract:

This study follows a worker-based approach and distinguishes between wage workers and self-employed workers. Our hypotheses stress the role of household head worker characteristics in explaining the probability of a household being poor. Using data from the Vietnam Household Living Standard Survey 2014 (VHLSS 2014), we estimate a probit regression model. The result shows that households whose head are informal wage earners have the highest risk of living in poverty, while households with the head are formal wage earners are at the lowest risk of being poor. The effects of self-employed households fall between those two extremes. The weaknesses of informal employment are reflected in four main aspects: low labor quality, low education level, low working time (hours/year), and lack of social insurance. Education plays a major role in reducing poverty and diminishing the difference in the effect of formal and informal statuses. The findings can serve as evidence for formulating effective policies related to poverty reduction.

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