land titling and rural transition in vietnam

Land Titling and Rural Transition in VietnamAuthor(s): Quy‐Toan Do /Lakshmi IyerSource: Economic Development and Cultural Change, Vol. 56, No. 3 (April 2008), pp. 531-579Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/10.1086/533549 .

Accessed: 10/06/2014 11:17

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access toEconomic Development and Cultural Change.

http://www.jstor.org

This content downloaded from 77.100.35.84 on Tue, 10 Jun 2014 11:17:27 AMAll use subject to JSTOR Terms and Conditions

http://www.jstor.org/action/showPublisher?publisherCode=ucpress

http://www.jstor.org/stable/10.1086/533549?origin=JSTOR-pdf

http://www.jstor.org/page/info/about/policies/terms.jsp


� 2008 by The University of Chicago. All rights reserved. 0013-0079/2008/5603-0006$10.00

Land Titling and Rural Transition in Vietnam

quy-toan doWorld Bank

lakshmi iyerHarvard University

I. IntroductionThere is a certain amount of consensus among economists that better propertyrights institutions lead to improved economic outcomes (see North andThomas [1973]; Knack and Keefer [1995]; or Acemoglu, Johnson, and Rob-inson [2001] for analyses of general property rights institutions). Scholars suchas De Soto (2000) have argued that the major barrier to prosperity in devel-oping countries is the inability to convert property into usable assets, becauseof a lack of clear-cut legally recognized rights. However, the empirical evidenceon the importance of issuing formal titles to land is inconclusive, both on theoverall effect of having property titles and on which dimensions of land rightsare crucial. Alston, Libecap, and Schneider (1996) find that investments inland as well as land values are positively associated with the possession offormal titles in Brazil; an analysis of land titling in Indonesia reached similarconclusions (SMERU Research Team 2002). Galiani and Schargrodsky (2006)also find urban land titles leading to increased investment in housing in BuenosAires. Besley (1995) finds that more secure land rights lead to greater in-vestment, but investment on the land may also have been undertaken with a

We thank two anonymous referees, Daron Acemoglu, Abhijit Banerjee, Esther Duflo, ChristopherGibbs, Jonathan Haughton, Vu Quoc Huy, Hanan Jacoby, Simon Johnson, and Martin Ravallionfor helpful comments and suggestions. We also thank seminar participants at the Williams DavidsonInstitute–Center for Economic Policy Research 2004 International Conference on the economicsof transition, Harvard Business School, University of Michigan, Suffolk University, the World Bank,and Yale University. Special thanks go to Nguyen Phong and the General Statistical Office, Hanoi,for allowing us to access the Vietnam Living Standard Measurement Study Surveys; to Tran ThiMinh Ha, Do Duc Doi, and the Ministry of Natural Resources and Environment, Hanoi, forproviding us with land registration and land administration manpower data; and to the MITSchultz Fund for financial support. The findings, interpretations, and conclusions expressed in thispaper are entirely ours. They do not necessarily reflect the view of the World Bank, its executivedirectors, or the countries they represent. Contact the corresponding author, Quy-Toan Do, [email protected] [email protected].



532 economic development and cultural change

view to strengthening land rights. On the other hand, Braselle, Gaspart, andPlatteau (2002) review a number of studies in African countries that showvery little impact of land titling on investment. Looking at labor marketactivities, Field (2003) finds that urban land titling is associated with anincrease in formal labor market participation in Peru. Several studies on landtitling have examined the impact on credit markets, and the results are mixed.Feder et al. (1986) in Thailand and SMERU Research Team (2002) in Indonesiafind that possession of legal titles leads to an increase in credit access for thepoor, while Boucher et al. (2002) in Nicaragua and Honduras, and Field andTorero (2004) in Peru, show that access to credit remains low even after landreforms have been implemented. Galiani and Schargrodsky (2006) also findno impact of formal property rights on access to credit markets in BuenosAires.

This study investigates the impact of a specific legal change to land rightsin Vietnam. Land rights are an important issue in Vietnam, where agricultureaccounts for nearly a quarter of gross domestic product (GDP) and two-thirdsof the workforce is engaged in agricultural activities. Agricultural land inVietnam was decollectivized in 1988, and land-use rights were granted tohouseholds. We focus on the subsequent land law of 1993, which gave house-holds the right to inherit, transfer, exchange, lease, and mortgage their land-use rights. This was implemented by issuing land titles (or Land-Use Certif-icates as they are known in Vietnam) to all households. This law initiated anextensive land-titling program in Vietnam: by the year 2000, nearly 11 millionland titles had been issued to rural households, making this one of the largestrural titling programs in the developing world, not only in scale but also inspeed of implementation. To view this program in comparative perspective,8.7 million land titles have been distributed in Thailand since the early 1980sand 1.87 million in Indonesia between 1996 and 2000 (SMERU ResearchTeam 2002); the largest urban titling program, aimed at squatters in Peru,distributed 1.2 million titles (Field 2003). The economic consequences arethus of interest not only to Vietnam but also to other developing countriescontemplating land-titling programs.

Our study contributes to the literature on land titling in several distinctiveways. First, we study a large nationwide titling program rather than onerestricted to certain areas or certain classes of people. This is in contrast toalmost all the studies cited above. This means that our results include anypotential general equilibrium effects of such titling programs. Second, ourwork focuses on the impact of granting new rights to land, including therights to mortgage and trade, rather than a formalization of existing rights(as is the case in most programs aimed at squatters). Further, by looking at



Do and Iyer 533

different outcomes, we are able to make inferences regarding which of thesenew rights was most effective. Third, our focus on the 1993 reform enablesus to distinguish the effects of land titles from the incentive effects of de-collectivization. Our work is complementary with other studies of agrariantransition in Vietnam, such as Benjamin and Brandt (2004) and Ravallionand van de Walle (2003). However, the use of measures of land reform progressacross provinces enables us to distinguish the incremental impact of the 1993land law from the overall effect of economic growth during this period.1

We use household-level data from two waves of the Vietnam Living Stan-dards Survey, which took place in 1992–93 and 1997–98, respectively. Sinceindividual-level information on possession of land titles is not available inthese surveys, we collected province-level information on the issuance of land-use certificates. We verify that there are no systematic differences in prereformcharacteristics between provinces that issued titles faster and those that wereslower in issuing titles. We then compare the change in outcomes for house-holds between the two time periods, across provinces at different stages of theland-titling process. We find that households in provinces that have madegreater progress in land titling increase the proportion of cultivated areadevoted to multiyear crops. While this effect is statistically significant, it isnot large in magnitude: a one standard deviation increase in land titling resultsin a 0.09 standard deviation increase in the proportional area devoted to long-term crops. We also find that households in provinces with more land titlesdevote more time to nonfarm activities. Providing titles to all householdswould result in an increase of 11–12 weeks of nonfarm work by the household.

Our results provide little support for the view that such increased investmentis financed by credit since we find no significant increase in household bor-rowing. Analysis of land market transactions is hampered by severe under-reporting; while we do find that the overall volume of transactions increasesafter the reform, the increase is not significantly different in provinces thatare at an advanced stage of the titling process. Overall, our results suggestthat the main driving force underlying these changes of Vietnam’s rural econ-omy is the increased security of tenure associated with the 1993 land law.

The paper is structured as follows: Section II describes the evolution of landrights in Vietnam, Section III presents a simple theoretical framework toanalyze the effects of land titling, and Section IV describes our data andempirical strategy. Section V documents the variation in the implementation

1 Deininger and Jin (2003) also analyze changes to property rights in Vietnam, with a focus onperceived security of tenure proxied by the possession of long-term use land. Ngo (2005) examinesthe combined impact of this proxy measure with the measure of land titling adopted in this study.




of the land reform across provinces. Our main results on crop and labor choiceare discussed in Section VI, and an investigation of the potential mechanismsat work is undertaken in Section VII. Section VIII concludes.

II. Land Rights in VietnamThe history of Vietnam in the second half of the twentieth century is punc-tuated by three key dates: 1954 marked the independence of the country fromthe French and its division into two parts, North and South; in 1975, theso-called Vietnam war ended with the reunification of North and South Viet-nam; and 1986 saw the implementation of sweeping economic reforms (the“Doi Moi” policy) and a move toward a market-oriented economy, whichcontinues to the present day. The material in this section is largely based onWiegersma (1988), Pingali and Xuan (1992), and Boothroyd and Pham (2000).

A. The Institutional Framework until 1988Before the Geneva Accord of 1954, Vietnam was under French colonial rule.During the colonial period, most farmland in Vietnam was owned either byFrench plantation owners or by large Vietnamese landlords: 52% of the landwas owned by only 3% of the indigenous population, and more than 60% offarmers across the country were landless in the mid-1940s.

After independence a major land reform was carried out in the North. Asa reward for their war efforts, land and ownership rights were distributed tofarmers, and a rapid increase in agricultural output and productivity followed.However, the policy was reversed, and land began to be collectivized in thelate 1950s, as communist ideology gained strength. As a result, 86% of allpeasant households and 68% of total farmland were brought into cooperativesby 1960. Despite significant declines in output, the collectivization processcontinued so that 90% of all peasant households in the North were workingin cooperatives by the mid-1960s. An illuminating stylized fact illustrates theimpact of such an incentive system: while individual rural households wereallocated 5% of private farmland, they derived 60%–70% of their earningsfrom this small plot (Boothroyd and Pham 2000, chap. 2).

Land institutions in the South during the same period were driven bypolitical conflicts. At times when the government sought support from thelocal elites, pro-landowner policies were adopted. When the war against NorthVietnam began, the government tried to gain popular support by adoptingthe Land-to-the-Tiller law in 1970. Tillers of the soil were to enjoy all thebenefits of their work, and this would be accomplished by providing ownershiprights to cultivators and putting a retention limit on landlords as low as 20hectares. However, the law found opposition from landlords, and the lack of



Do and Iyer 535

independence of the bureaucracy made enforcement uneven throughout SouthVietnam.

In 1975, when the war ended and the country was reunified, land collec-tivization started in the South but was implemented with little success: aslate as 1986, only 5.9% of farmers in the Mekong Delta and 20% in theSoutheastern region were part of cooperatives, while this figure amounted to85% in the Central Lowlands region (Pingali and Xuan 1992). Under thecollective system, all households were paid a share of output according to theirrecorded labor hours on the communal land. In 1981, the first changes weremade to these arrangements: workers were now allowed to keep all of thesurplus they produced over a contracted output. However, this policy was latermodified, and quotas were constantly renegotiated, resulting in a decline ofpublic confidence. Agricultural yields were extremely low in this period, and,even as late as 1985, Vietnam was a net importer of rice.

Faced with a worsening economic crisis, the government announced in 1986the program of Doi Moi, or Renovation, and began a gradual movementtoward a market economy. As part of a major structural adjustment program,production and consumption subsidies were eliminated from the state budget,government spending was reduced to 6% of GDP, the government workforcewas reduced by 15%, 500,000 soldiers were demobilized, interest rates onloans to state-owned firms were raised, and central bank credit was no longerused to finance the budget deficit. The economy started opening up to trade,and the central bank undertook a massive devaluation of the currency to theprevailing black market rate. Inflation rates were brought down from 400%in 1986–87 to 10% in 1993. Financial markets were partially deregulated,foreign banks were allowed to operate in Vietnam, and a stock exchange wasopened in 2000. In the agricultural sector, Resolution 10 of 1988 grantedland-use rights to individual households, while the land law of 1993 madethese rights pledgeable and tradable. These two changes are described in detailin following sections.

These reforms have had a dramatic impact on the economy. During theperiod 1990–2005, the Vietnamese economy experienced annual growth ratesof 7.5%. Crop production grew at a rate of 5.5% over the period 1990–2004and accounted for 29% of total non-oil exports in 2003. By 2002, Vietnamwas the third largest exporter of rice and the second largest exporter of coffee,pepper, and cashews. Exports and imports amounted to 75% of GDP by1995.2 The benefits from growth have been fairly widespread: poverty ratesare estimated to have declined from 75% in 1984 to 55% in 1993 (Dollar

2 World Development Indicators Online database, http://go.worldbank.org/3JU2HA60D0.




and Litvack 1998), 37% in 1998, and 29% in 2002. In January 2007, Vietnamjoined the World Trade Organization (WTO) as its 150th member.

B. The 1988 Land Law

The 1988 land law was aimed at liberalizing the agricultural sector in Vietnam.Resolution 10 of this law consisted of transferring control and cash-flow rightsfrom the farming cooperative to the individual household. Land was allocatedto households with 10–15 years of secure tenure, output markets were pri-vatized, and investment decisions were decentralized and left to households.Private property was virtually instituted. However, as land-use rights weregiven to families without the possibility of trading such rights, a proper landmarket did not develop despite some informal transactions.

Land allocation to individual households was conducted by the communeauthorities and encountered some difficulties across the country. In the Northand in some regions of the South, land was distributed on a fairness basis,taking into account soil and sociodemographic characteristics of the region.Comparing the realized land allocation process with a simulated market-basedoutcome, Ravallion and van de Walle (2003) conclude that the realized processgenerated lower inequality and made the poorest better off. However, theprocess sometimes relied on arbitrary considerations, leading to favoritism anddisputes. For instance, Hayami (1994, 13) reports that “a farmer . . . in HaiHung Province complained that he received too small a land allocation becausehis eldest son was in military service and his other children were so youngthat they received only one-third of an adult’s allocation at a time. Thus, heexpects that his unfavorable allocation will be corrected at the end of the ten-year tenure period.” The situation in the South was complicated by the factthat Resolution 10 stipulated that farmers should be assigned the land theyowned prior to 1975, and this generated disagreement between farmers andformer landlords, although a 1989 ordinance gave rights to farmers. Theallocation was thus not immune to controversy, and disputes were still beingsettled in July 2001, as land allocation was being brought to completion inrural areas.

To many Vietnamese, Resolution 10 is perceived as the major land reformundertaken since 1975, and some scholars attributed Vietnam’s agriculturaloutput growth to such liberalization (see, e.g., Pingali and Xuan 1992). Thereis no denying that newly assigned property rights have unleashed farmers’incentives to invest and put an effort into their land, but much remained tobe done to achieve further economic efficiency. The 1993 land law was anadditional step toward this end.



Do and Iyer 537

C. The 1993 Land Law and the Issuance of Land-Use CertificatesThe main focus of this study is the 1993 land law. The spirit of the law isin continuation of the reforms undertaken by the government since 1988.Despite the allocation of land and its corresponding use rights, no transactionscould be made officially. The 1993 land law made up for this deficiency. Itgranted five rights to the household: the right to transfer, exchange, inherit,rent, and mortgage.3 The law also extended the lease term to 20 years forannual crop land and 50 years for perennial crop land (Land Law of Vietnam1993, article 20). The implementation of the land law consisted of providingland-use certificates (LUCs) for the purpose of exercising these rights: forinstance, if a landowner wanted to use his land as collateral for a loan, theLUC would be handed over to the lender. As the actual procedure for issuingthe land titles has some relevance for our empirical strategy, it is worth goinginto in some detail.

The issuance of LUCs is done as follows: individuals first have to apply fora land-use certificate (alternatively known as Land-Tenure Certificate or RedBook) through the commune-level People’s Committee. The District Bureauof Land Administration then does the groundwork, which includes makinga list of all land users, training the staff, purchasing materials, and checkingand updating the documents related to land such as cadastral maps, landsurvey records, and so forth. In the meantime, a land registration committeeis set up, which includes members from the District Bureau of Land Admin-istration as well as officials from the commune-level, district-level, and some-times province-level People’s Committees. This process takes about 4–5 weeks.Application forms for land registration are then given out to all the land usersin the commune, who are asked to list all the plots of land owned or allocatedto them. This form has finally to be signed, not only by the land user himselfbut also by all neighboring households, in order to certify the absence ofdisputes regarding claims on the land.

The land registration committee scrutinizes all these forms and then decideswhether a given land user is eligible or not. Land users are classified as ineligibleif (i) they obtain the land through an illegal land transfer, that is, withoutregistering the transaction, without paying transfer taxes, or without a legalcontract; (ii) they inherit the land from parents without a formal inheritanceletter, so that old documents are still in the parents’ names; (iii) they haveno legal documents to prove their claim to the land; (iv) they are illegally

3 There were further modifications to the land law in 1998 and in July 2001. The 1998 revisionsgranted further rights by making it possible to sublease land and also allowed Vietnamese entre-preneurs to use such rights as their contribution to a joint venture with a foreign company. The2001 additions simplified procedures in urban areas.




occupying unallocated land; (v) they have not paid all their land taxes in thepast; or (vi) there are disputes regarding their ownership or the boundaries ofthe land they claim. Within 10 days of sending these application forms, apublic meeting is held in which information regarding eligibility is madepublic. At this time, the land administration also tries to resolve these disputes.The list of land users who are eligible for receiving the LUC is then sent tothe district-level People’s Committee. Unresolved disputes are referred to aspecial working group within the General Department of Land Administration(GDLA, now part of the Ministry of Natural Resources and Environment,MONRE). After approval at the district level, work begins on making theactual LUC for the land user. This stage is estimated to take about 1,500–2,000man days per commune in urban areas, and this figure is likely to be similarin rural areas. In 1998, there were (on average) 160 communes per province,and 1,300 households per commune.

Like some previous land reforms, the 1993 land law was unevenly imple-mented throughout the country. Because province-level differences in the speedof implementation of this reform are the key to our empirical strategy, weinvestigate the sources of such heterogeneity. According to Vo (1997), districtBureaus of Land Administration have on average five members, and mostcommunes have only one land officer, which makes registration a lengthyprocess. Haque and Montesi (1996, 7) also report the major reasons for thisslow progress to be “a lack of adequate finances, a lack of trained cadres, alack of interest and enthusiasm on the part of officials, a lack of proper directionand supervision and disputes among the cadres,” which is consistent with theinformation given to us by the GDLA. The GDLA also pointed out thatanother major factor that slowed down the process was the number of disputesthat needed to be resolved prior to LUC issuance. An additional reason fordelay may also be due to the fees related to registration and the backlog oftaxes that some households may be required to pay to become eligible. How-ever, fees are not very high, below VND 20,000 (less than US$1.50) in mostareas.

Some aspects of this large land-titling program gave rise to concerns re-garding the long-term sustainability of this reform. The guidelines for im-plementation of the five rights was formulated and approved by the GDLAin late 1998. In the meantime, substantial volumes of transactions had notbeen reported to the commune authorities, raising the concern that commune-level land registries would be outdated in a few years’ time (Asian DevelopmentBank 1998). The certificates were issued at the household level rather thanthe plot level, which caused problems in updating the land-use certificate in



Do and Iyer 539

the event of a land transaction. Following the passage of the New Land Lawin November 2003, the government began issuing certificates at the plot level.

III. What Is the Potential Impact of the Land Law?What is likely to be the impact of the land law and, more specifically, theissuance of LUCs? The longer lease term and the right to inherit decrease thelikelihood that an individual and her offspring will be expropriated by thestate, hence increasing the security of tenure on land and providing an incentiveto undertake long-term investments. If such investment (e.g., planting pe-rennial crops) is labor saving, there may also be a shift to nonagriculturalactivities. The rights to transfer, exchange, and lease LUCs create a formalmarket for land, which may achieve a better allocation of land than a cen-tralized/informal system. The right to mortgage LUCs may allow farmers toundertake investments that have high up-front costs, such as planting multi-year crops; however, access to credit markets might reduce the need to diversifyeconomic activities as a means of consumption or income smoothing. Theincremental impact of this right will depend on the relative inability of thecommune to put in place implicit or explicit contracts aimed at providingincentives to reimburse loans.4 We formalize these intuitions in a formal modelbelow.

A. The Basic SettingConsider a small open economy populated with farmers , eachi � {1, ... , N}having one plot of land. Each individual is endowed with one unit of laborthat can be split between the three available technologies: nonfarm activity,rice cultivation, and perennial crop cultivation. The production functions aresimply specified as follows: for any individual , and plot of sizei � {1, ... , N}m,

nonfarm (l) p f(l) p l,

j 1�jrice (l, m) p g(l, m) p Gl m ,

g 1�gperennial (l, m) p h(l, m) p Hl m ,

where l is the amount of labor invested by individual i. We assume thatagricultural production exhibits constant returns to scale. Let represent{n, r, p}the amounts of time devoted to nonfarm activities, rice cultivation, and pe-rennial crop cultivation, respectively. The key difference is that nonfarm ac-tivities and rice cultivation are assumed to yield returns immediately, while

4 Anecdotal evidence collected during fieldwork suggests that in some places, before 1993, com-mune authorities would commit not to reallocate land to households that defaulted on a loan.




returns from perennial crops are realized only in the future. Let r denote theshare of land area devoted to perennial crop cultivation; the remaining 1 �

is used to grow rice. Aggregate land area is normalized to one. Farmersr

have access to a credit market, where they can borrow in order to buy landor pay for any opportunity costs of undertaking long-term investments.

Economic activities are undertaken over two periods as follows:

1. : Financial contracts between farmers and lenders are signed.T p 0Land exchange arrangements and investments are undertaken. Returnson nonfarm activity and rice cultivation are realized. Intermediate con-sumption takes place.

2. : Farmers choose to repay loans or default, in which case theirT p 1land is seized by the lenders. Output on perennial crops is realized.Final consumption takes place.

We assume that expropriation is characterized by a constant probability ofexpropriation a (reflecting the general insecurity of property rights and thepossibility of land being taken over by the state for reallocation) and a prob-ability of expropriation that is contingent on default b, where default is definedby the nonreimbursement of a loan contracted at time . In summary,T p 0agents have a probability a of losing their land even if they do not defaulton their loans and a probability if they do. The land expropriateda � b

unconditionally is redistributed to agents in a lump-sum manner, while theland expropriated under default is given to creditors in case of default. Thetiming of the economy also implies that expropriation matters only if perennialcultivation is undertaken. We model the land law as a change in the probabilityof land expropriation as follows.5T p 1

Land law. The land law is the transition of from topre pre(a, b) (a , b )( ), such that (improved security of tenure) andpost post pre post prea , b a ≤ a b ≤

(increased ability to pledge land as collateral). We assume that the landpostb

law is unanticipated by agents.Land markets. A land allocation is a partition of the overall surface, that

is, each individual i is allocated a plot of area , so that . TheN

m � m p 1i iip1

vector denotes the land allocation schedule at the end of time(m )i ie{1,...,N}

, while the initial distribution of land is exogenous and is denotedT p 0. In the pre-1993 economy, m is not a choice variable, that is,0(m )i ie{1,...,N}

. In the post-1993 economy, m is the outcome of a land market equi-0m p m

librium, where h denotes the price of a marginal piece of land. We set theland price in the pre-1993 economy.h p 0

5 Parameters and equilibrium values of the pre-1993 economy will henceforth have a superscript“pre” while post-1993 variables will be noted with a superscript “post.”



Do and Iyer 541

Credit markets. Agents have access to an intertemporal saving technologywith the risk-free rate normalized to one. Furthermore, there exists an atomisticmarket, in which risk-neutral lenders can access funds at the risk-free rate andlend these funds back to farmers. We assume free entry in the credit supplysector, so that lenders break even in equilibrium. A financial contract forindividual i consists of the following: (i) an amount B borrowed at time

and (ii) an interest rate t so that is due at the beginning of timeT p 0 tB. We denote if agent i defaults on her loan at .T p 1 d p 1 T p 1

Individual preferences. Farmers’ utility functions are defined over con-sumption in both time periods as follows:

U[C , C ] p ln C � ln C .0 1 0 1

Farmers make consumption decisions ; savings decisions S; borrowing{C }T Tp0,1

and reimbursement decisions ; and land, labor, and capital investment{B, d}decisions ; in order to maximize their utility. In the post-1993{r, n, r, p, k}economy, they also make land market decisions.

We can decompose this optimization problem into two stages. In the firststage, farmers have amount of land and one unit of labor, and take them0

vector as given. The optimization problem results in a reduced-form(a, b, m)utility function as follows:

V(a, b, m ) p max U[C , C ]i 0 1C ,C ,S,B ≥ 0,d p {0,1}0 1

r,n,r,p � [0,1]n � r � p ≤ 1

subject to

h(m � m ) � C � S ≤ B � f(n) � g[r, (1 � r)m]0 0

(1 � d)tB � C ≤ S � (1 � a � bd)h( p, rm)1{[1 � (1 � d)t]B ≤ bdh( p, rm).

In the second stage, farmers make land market decisions to maximize utility.In the pre-1993 economy, the land distribution is not a choice variable, sothat

pre pre pre pre pre pre 0V (a , b , m ) p V(a , b , m ).

In the post-1993 economy, farmers take land prices h as given in order tomaximize their reduced-form utilities, so that

post post post post post postV (a , b , m ) p max V(a , b , m).m




The land market clearing condition determines land price h, given that.

N post� m p 1iip1

B. Equilibrium OutcomesWe solve for a subgame-perfect equilibrium of the economy described above.Choosing to invest in perennial crops will depend on the ability to borrowin order to cover land purchases and the opportunity cost of intermediateconsumption. Since perennial crops face a risk of expropriation a, farmers willallocate land across crops in order to maximize profits. Finally, depending oninvestment choices, the allocation of land across farmers will be either irrelevant(due to constant returns to scale) or driven by how stringent credit constraintsare. We summarize the main results below, deferring details of the proofs tothe appendix. For ease of exposition, we restrict attention to two extremecases: access to credit is either unrestricted or absent .(b p 1) (b p 0)

Result 1 (crop choice). If expropriation risk a is high enough, then farmersdevote the entire land area to rice cultivation. If a is not too high and accessto credit is unrestricted, then the entire land area is devoted to cultivatingperennial crops. However, if access to credit is absent, then the need forintermediate consumption requires farmers to diversify across the two typesof crops. Formally, the conditions are as follows:

1 11/1�j 1/1�g ∗(jG) ≥ [g(1 � a)H] ⇒ r p 0

j g

1 11/1�j 1/1�g ∗(jG) ! [g(1 � a)H] and b p 1 ⇒ r p 1 (1)

j g

∗ 01 1 [1�h(m �m )](1�g)1/1�j 1/1�g ∗(jG) ! [g(1 � a)H] and b p 0 ⇒ r p � g.

1/1�j ∗j g (1�j/j)(jG) m

The interesting case is when perennial crops are a more productive technologyin the absence of expropriation:

1 11/1�j 1/1�g(jG) ! (gH) . (2)

j g

In this case, if was high enough such thatpre 1/1�ja (1/j)(jG) ≥ (1/g)[g(1 �, then an increase in the security of tenure, that is, a decrease inpre 1/1�ga )H]

a, leads to an increase in the proportional area dedicated to perennials.Result 2 (labor choice). In the absence of credit constraints, aggregate off-

farm employment increases if and only if

1/1�j post 1/1�g(jG) ≥ [(1 � a )gH] . (3)



Do and Iyer 543

A necessary condition for this is that , that is, perennials need to bej 1 g

comparatively less labor intensive than rice cultivation. In the presence ofcredit constraints, is a sufficient condition to have an increase in ag-j 1 g

gregate off-farm employment.Result 3 (consumption). When households have access to credit, they max-

imize aggregate output, and consumption is perfectly smoothed across periods.Thus, when ,postb p 1

post pre post preC 1 C and C 1 C .0 0 1 1

In the presence of credit constraints and in the absence of any land sales orpurchases, that is, , agricultural output at necessarily dropspre postm p m T p 0as farmers decide to partially move away from rice, so that we have

post preC ! C .0 0

Result 4 (land market activity). The first-order condition to determine h,the market price of land, is given by

∗df dg d C0∗ ∗ ∗ ∗ ∗[n (m)] � [r (m), (1 � r (m))m] � h[ p (m), r (m)m] p h. (4)∗dm dm dm C1

So there is activity in the land market only if (i) the initial land allocationwas not efficient and there is access to credit or (ii) households change theirdecisions with regard to perennial crops and off-farm activities and chooseoptimal land allocations accordingly.

IV. Data and Empirical StrategyA. DataOur major source of data is the two rounds of the Vietnam Living StandardsSurvey, conducted by the General Statistical Office of the government ofVietnam and funded by the United Nations Development Program (UNDP)and the Swedish International Development Agency (SIDA). The first roundof the survey was conducted in 1992–93 (henceforth VLSS-93) and the secondround was conducted in 1997–98 (henceforth VLSS-98). We take the formeras our prereform baseline data and the latter as our postreform outcomes.Multistage stratified sampling techniques were used to select 4,800 householdsin the first round. In 1998, the sample size was increased to 6,000, of which4,285 households had been interviewed in the first round as well.6 The surveyswere structured on the lines of the World Bank LSMS (Living Standards

6 The attrition rate is around 7% in rural areas; it is higher for smaller, urban, more educated,and richer households. The overall attrition rate is 11%.




TABLE 1CHARACTERISTICS OF SURVEY HOUSEHOLDS SAMPLE: RURAL HOUSEHOLDS

1998 Survey

1993 SurveyPanel

Household HeadsReplacement

Household Heads

Number of households 3,840 3,375 894Age of household head 44.85 47.47 45.63

(14.79) (13.81) (14.07)Household size 4.97 4.79 4.84

(2.12) (1.90) (1.85)Sex of household head

(1 p male) .77 .77 .84(.42) (.42) (.37)

Ethnicity (1 p kinh) .86 .84 .82(.35) (.36) (.38)

Literate household head(1 p literate) .88 .88 .86

(.33) (.33) (.34)Years of education of

household head 5.96 6.48 6.03(4.07) (3.90) (3.85)

Real household expendi-ture (‘000 dong) 5,541.00 10,189.95 11,487.02

(3,856.02) (6,426.11) (7,278.54)Farming as main

occupation .83 .78 .76(.38) (.42) (.43)

Source. Vietnam Living Standards Measurement Study Surveys 1993 and 1998.Note. All means are weighted by sampling weights.

Measurement Study) format and are considered high-quality data. They containdetailed information on household size and composition, educational attain-ment, health, employment, fertility, migration, household expenditures, ag-ricultural activities, nonfarm economic activities, and borrowing and lendingactivities. Table 1 presents some basic characteristics of the rural householdsin the surveys, broken down into whether they were reinterviewed (panel)households or new households. We note the large increase in real householdexpenditure between 1993 and 1998, consistent with the high growth ratesenjoyed by the Vietnamese economy in this period.

Province-level data on progress of Land-Use Certificate issuance (numberof households and communes with LUC), as well as the number of landdepartment officials in each province, come from the records of GDLA inHanoi. We have data on province-level population, agricultural yields, andurbanization from the annual statistical yearbooks published by the GeneralStatistical Office. We also use the 1994 Agricultural and Rural Census con-ducted by the Ministry of Agriculture and Rural Development to constructmeasures of infrastructure facilities in rural areas as well as the extent of statefarms in agriculture.



Do and Iyer 545

B. Empirical StrategyIdeally we would like to compare economic activity choices across two house-holds that differ only in the quality of land rights possessed by them. In oursetting, we take the possession of a land-use certificate as an indicator of havinggood land rights. However, we do not have household-level data on landregistration, since the VLSS-98 does not ask this question.7 We therefore usethe province-level proportion of households with LUC as a measure of theprobability that a given household would have an LUC. We will thus be usingthe differences in the level of LUC issuance across provinces to identify theimpact of the land law. We will also use an alternative measure (speed ofregistration) that captures how quickly the province issues LUCs to at least50% of the households, which takes into account the whole process of LUCissuance over time.

We estimate the impact of the land reform using a differences-in-differencesstrategy, by comparing the difference between 1993 and 1998 (before andafter reform) for the high-issuance provinces as compared to the low-issuanceprovinces. The regression equation we use is

y p a � a T � a R � a (T # R ) � X b � e , (5)ijt 0 1 t 2 j 3 t j ijt ijt

where represents the outcome of household i of province j at time t (1993yijt

or 1998), represents the time dummy (equal to zero for 1993 and one forTt

1998), is the measure of land reform implementation in province j (pro-Rj

portion of households with LUC in 1998 or number of years since LUC issuancecrossed 50% threshold [speed measure]), and are other household char-Xijt

acteristics. The two main outcomes we will consider are the proportion ofcultivated area devoted to long-term crops and the fraction of household labordevoted to nonfarm activities. The coefficient represents the change betweena1

1993 and 1998 for a province that had zero LUC issuance, while representsa2

the difference between high-issuance and low-issuance provinces in 1993 (pre-existing difference). Our coefficient of interest is , which tells us how mucha3

the high-issuance provinces have increased investment, compared to the low-issuance provinces over the period 1993–98. We will be controlling for house-hold characteristics like age, gender, and education of the household head;

7 The community questionnaire in VLSS-98 does ask the commune head the number of years forwhich households have the right to use annual and perennial crop land. The answers to this questionare sometimes wrong (e.g., some communes say they have the right to use annual crop land for50 years) and differ across annual and perennial categories (i.e., many communes that report 20years for annual crop land report less than 50 years for perennial) and are only weakly correlatedwith our province-level measures of LUC issuance. We therefore feel that this probably reflectssome perceptions of the commune head rather than actual possession of LUCs.




total household size; ethnicity; and total area cultivated. All our regressionsare for households in rural areas only, since our land reform figures are for therural sector. Since our main explanatory variable, the LUC issuance measure,is measured at the province level, we will also cluster all our standard errorsat the province level (see Bertrand, Duflo, and Mullainathan 2004).

Our identification assumption is that the household-specific error termis uncorrelated with the province-level LUC issuance measure . We shoulde Rijt j

note that our estimate of will be biased upward if there are province ora3

household characteristics that are correlated both with the issuance of LUCsand with our outcome variables or if households plant long-term crops in aneffort to obtain a longer lease term for their land.

The next section examines in greater detail whether LUC issuance is cor-related with province level characteristics and whether investments in long-term crops occur prior to land titling. We also control for all time-invarianthousehold and province characteristics by running specification (5) using onlythe panel households and including household fixed effects as follows:

y p a � a T � a (T # R ) � e ,ijt i 1 t 3 t j ijt

where is a fixed effect for household i. This reduces our sample size sinceai

many households were not interviewed in both years.

V. Implementation of the 1993 Land LawTable 2 documents the progress of LUC issuance in Vietnam. About 24% ofhouseholds had been issued land-use certificates at the end of 1994; by theend of 2000, this proportion had increased to 90%, consistent with the targetof issuing certificates to more than 11 million rural households by the end of2001. Table 2 also shows considerable variation across provinces in the speedof implementing this process. For instance, An Giang province issued LUCsto 91% of households in 1994, at which time Lai Chau and Lang Son hadmade negligible progress. Similarly, the proportion of households with LUCsin 1998 varied from 12% to 100% across different provinces. Another wayof seeing this is the variation in the number of provinces that attained certainlevels of LUC issuance over the years (table 2, panel B). For instance, 21provinces crossed the 25% threshold in 1994; by 1998, 60 out of 61 provinceshad attained this threshold. Sixteen provinces had issued LUCs to 50% ormore of households by 1995, and 48 had attained this threshold by 1998. Asof 2000, five provinces had yet to attain the 75% level of LUC issuance.

The identification strategy in this study relies on the observation that theland law was not implemented homogeneously throughout the country. Ourstrategy is likely to give biased results if the province-level registration levels



Do and Iyer 547

TABLE 2MEASURES OF LAND RIGHTS

A. Proportion of Households Registered

Mean North South Min Max

1994 .237 .246 .227 .001 .9141995 .367 .345 .391 .040 .9601996 .435 .404 .469 .074 .9521997 .632 .597 .667 .111 1.0001998 .713 .687 .740 .119 1.0002000 .902 .893 .911 .533 1.000

B. No. of Provinces withRegistration More Than

25% 50% 75%

1994 21 8 41995 33 16 61996 44 25 141997 57 43 281998 60 48 382000 61 61 56

C. Correlation among Registration Measuresand Manpower Measures

% households registered 1998 1.000% households registered 1996 .644 1.000% households registered 1994 .376 .595 1.000Years since reg 1 25% .492 .691 .697 1.000Years since reg 1 50% .828 .799 .648 .619 1.000Officials/commune 1994 .102 �.033 �.050 �.016 .072 1.000Officials/commune 1998 .113 .250 �.087 .136 .111 .062 1.000Officials/1,000 households 1994 .081 �.118 .077 �.016 .070 .465 �.070 1.000Officials/1,000 households 1998 �.007 �.051 .110 .076 .015 �.018 .304 .702

Source. Figures computed by authors from data provided by General Department of Land Administra-tion (GDLA), Hanoi.Note. Proportion of households registered in panel A refers to the number of households that possessa Land Use Certificate as a fraction of the total number of households. For 1996, 1998, and 2000, GDLAprovided the total number of households. For the remaining years, total number of households isestimated by authors based on total number of agricultural households. The entries in panel B are thenumber of provinces in which the proportion of households registered exceeds the specified threshold(25%, 50%, 75%). “Years since reg 1 25%” is 2001 minus the year in which LUC issuance in the provinceexceeded 25%. “Officials/commune” is the number of land department officials in the province dividedby the total number of communes in the province. “Officials/1,000 households” is the number of landdepartment officials in the province divided by the total number of agricultural households.

are correlated with other province-level characteristics that also affect ourdependent variables. We therefore try to see whether there are any observablesystematic differences between high-LUC-issuance provinces and low-issuanceones. Table 3 reports regressions in which the dependent variable is a measureof the LUC issuance in 1998 and the explanatory variables are province char-acteristics. Our two major measures of the prevalence of land rights due tothe reform are the proportion of households with LUC in 19988 and the speed8 We choose 1998 because our household survey data are from this year; see Sec. IV.



548

TAB

LE3

WH

AT

DE

TER

MIN

ES

IMP

LEM

EN

TATI

ON

OF

LAN

DR

EFO

RM

?(S

AM

PLE

:P

RO

VIN

CE

S)

%H

ous

eho

lds

Reg

iste

red

1998

Spee

do

fR

egis

trat

ion

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(7)

(8)

Land

offi

cial

s/co

mm

une

(199

4).0

63.0

69.0

55.0

55.8

03.6

18.5

23(.0

72)

(.065

)(.0

52)

(.053

)(.7

20)

(.517

)(.5

24)

Po

pul

atio

nd

ensi

ty19

93�

.012

�.0

12�

.097

�.0

89(.0

15)

(.015

)(.1

15)

(.114

)To

tala

rea

of

pro

vinc

e(’0

00sq

km)

�.1

28�

.099

�.1

35.3

33(.1

23)

(.132

)(.9

20)

(1.0

46)

Pro

po

rtio

nur

ban

1993

.343

.230

�.1

47�

.854

(.310

)(.3

18)

(2.5

87)

(2.5

37)

Pro

po

rtio

nun

der

per

enni

alcr

op

s19

93�

.137

�.1

70�

2.13

3�

2.73

2(.1

91)

(.210

)(3

.039

)(3

.168

)P

rop

ort

ion

und

erp

eren

nial

cro

ps

1994

.005

(.154

)D

umm

yfo

rN

ort

h�

.030

�.0

12.0

33.1

13.1

15�

.723

�.6

65.0

92.5

27(.0

71)

(.071

)(.0

74)

(.120

)(.1

30)

(.646

)(.6

61)

(.589

)(.9

97)

Pro

po

rtio

no

fco

mm

unes

havi

ngm

arke

t.1

421.

539

(.207

)(1

.650

)P

rop

ort

ion

of

com

mun

esha

ving

hig

hway

�.1

84�

2.86

1(.1

59)

(2.0

51)



549

Pro

po

rtio

no

fco

mm

unes

havi

ngcl

inic

.400

.320

(.368

)(2

.844

)M

ean

age

of

hous

eho

ldhe

ad(1

993)

.022

**.0

22**

.088

(.009

)(.0

10)

(.086

)M

ean

hous

eho

ldsi

ze(1

993)

.049

.049

.914

(.060

)(.0

61)

(.561

)M

ean

year

so

fed

ucat

ion

(199

3).0

19.0

19.1

57(.0

26)

(.027

)(.2

62)

Log

per

cap

ita

exp

end

itur

e(1

993)

.204

.204

1.67

2(.1

66)

(.166

)(1

.398

)O

bse

rvat

ions

5957

5754

5457

5555

54R

2.0

6.0

7.1

1.1

8.1

8.0

5.0

6.0

9.1

4

No

te.

Ro

bus

tst

and

ard

erro

rsar

ein

par

enth

eses

.“%

hous

eho

lds

reg

iste

red

”is

the

pro

po

rtio

no

fru

ralh

ous

eho

lds

inth

ep

rovi

nce

who

have

aLa

ndU

seC

erti

ficat

e.“S

pee

do

fre

gis

trat

ion”

isco

mp

uted

as20

01m

inus

the

year

whe

n50

%o

fho

useh

old

sin

the

pro

vinc

eo

bta

ined

LUC

s.R

egre

ssio

nsex

clud

eH

ano

iand

Ho

Chi

Min

hC

ity,

whi

char

eo

utlie

rsin

term

so

fp

op

ulat

ion

den

sity

and

urb

aniz

atio

nra

tes.

Reg

ress

ions

(6)

and

(7)

excl

ude

old

Song

Be

pro

vinc

e,w

hich

isan

out

lier.

**Si

gni

fican

tat

5%.




of registration measure that we compute as 2001 minus the year in whichLUC issuance reached 50% of households. While the first measure capturesthe status of issuance at a point of time, the second measure is based on thewhole process of land titling over all the years. These two measures are highlycorrelated (correlation p 0.83).

As mentioned in Section II.C, land officials in Vietnam cited two mainsources of delay in land titling: lack of manpower and the time taken to resolvedisputes. To see whether this is indeed the case, we obtained (from GDLA)data on land department manpower at the province level in different years.We find that most provinces had less than two land officials per commune inthese years. As expected, the number of land officials per commune (or per1,000 agricultural households) is somewhat positively correlated with measuresof the speed of LUC issuance (table 2, panel C). However, these correlationsare not very large, and none of them are statistically significant. We wereunable to obtain any quantitative information on the number of disputes ineach province.

Table 3 shows that land registration is not strongly correlated with theland department manpower levels or any other province characteristics suchas population density, urbanization, proportion of communes having a market,mean level of education, or per capita household expenditure. The results arequalitatively similar when we use land officials per 1,000 agricultural house-holds instead of land officials per commune, when we include paddy yieldsas an additional explanatory variable, and when we use proportion of householdswith LUC in years other than 1998 as a measure of the progress of land reform(results available upon request). We also tried specifications including weathervariables (rainfall and sunshine hours recorded in 1993) as well as a dummyfor whether the province was already reporting coffee production in 1996:these variables do not have much explanatory power for our dependent variable;in particular, the coefficient on the coffee dummy is negative and insignificant.

We also considered the possibility that households might be planting long-term crops in advance of the LUC issuance in an effort to get a longer leaseterm for their land. If this is a major reason for differences in LUC issuance,we would expect to find a significant relationship between early investmentsin long-term crops and the extent of LUC issuance in 1998. To check for this,we regressed the LUC issuance on the proportion of land under perennialcrops estimated from the 1994 Agricultural and Rural Census. By 1994, thelaw had been announced, and several provinces had already made progress inimplementing it. We find that this is not a significant predictor of LUCissuance in 1998 (table 3, col. 5). It could also be that the provinces differon dimensions such as “good governance” or “progressiveness,” which might



Do and Iyer 551

reflect itself in both faster LUC issuance and greater incentives toward long-term crops. As a partial check for this, we included as an additional regressorthe 2006 Provincial Competitiveness Index computed by the Vietnam Cham-ber of Commerce and Industry and the Vietnam Competitiveness Initiative(VNCI) and funded by the U.S. Agency for International Development. Again,this index is not a significant predictor of LUC issuance.9 While our data andreform predate the index, this is a reasonable proxy for province-level gov-ernance quality if such a characteristic changes slowly over time.

We note further that there is no significant difference in the implementationof the reform in the North and the South, despite the North’s longer historyof collectivization: in 1994, provinces in the North had on average 24% ofhouseholds registered, while provinces in the South had a registration levelof 23%. The corresponding figures for 1998 were 74% and 69%. The mapin figure 1 also demonstrates no specific geographical pattern in the progressof land reform across provinces. While it is still possible that there are someunobservable differences between high-issuance and low-issuance provinces, itis reassuring for our identification strategy that LUC issuance is not system-atically related to any of the several different observable province characteristics.Since it is extremely rare to find a “natural experiment” that assigns landrights in a truly random fashion (Galiani and Schargrodsky [2006] is anexception), this is probably the best that can be done to ensure comparabilitybetween treatment and control groups. The fact that our results are robust torestricting our sample to only the panel households also confirms that ourresults are not driven by some preexisting province or household time-invariantcharacteristics.

VI. Land Rights and Investment Decisions

We first look at the impact of the 1993 land law on crop and labor decisionsof rural households.

A. Crop Choice

As discussed earlier, the additional land rights conferred by the 1993 landlaw might induce households to undertake more long-term investments ontheir land. One way of measuring this is by looking at the allocation of landbetween annual crops and multiyear industrial or fruit crops, which typicallyyield returns only after a few years. The major multiyear crops grown by

9 Results available from the authors on request. The results are unchanged when we use only thenonland components of the index.




Figure 1. Geographical distribution of registration levels (1994–98)

Vietnamese farmers are coffee, tea, rubber, black pepper, and cashews; fruitcrops include citrus fruits, pineapples, bananas, and mangoes.

The difference-in-differences strategy is outlined in table 4, panel A. Prov-inces have been divided into two categories, depending on whether the pro-portion of households with land-use certificates in 1998 was above or belowthe sample median (80%). The numbers reported in panel A are the proportionsof cultivated land devoted to perennial industrial and fruit crops in each year,averaged across all rural households, in the two categories of provinces. Thus,the differences in the bottom row are the differences across time for each ofthe two categories of provinces, while the differences reported on the rightcolumn show for each year the difference in outcomes between low and highregistration provinces. Finally, the bottom right cell computes the difference-in-differences outcome: a household in a highly registered province in 1998on average increases its share of cultivated land area devoted to perennial



Do and Iyer 553

industrial and fruit crops by 5.6 percentage points more than a household ina low-registration province.

Panel B of table 4 presents a continuous version of panel A, followingspecification (5). Consistent with the results of panel A, panel B shows thatthe land reform led to a statistically significant increase in the proportion oftotal cultivated area devoted to multiyear crops: a household in a province inwhich everybody had an LUC would increase this proportion by 7.5 percentagepoints over the period 1993–98, compared to a household in a province inwhich nobody was issued an LUC (panel B, col. 2). This means that if theproportion of households registered goes up by one standard deviation, theproportional area devoted to long-term crops will increase by 0.09 standarddeviations. This increase comes at the expense of annual crops, which show adecrease of 6.5 percentage points in their share of total cultivated area (re-gressions not shown).10 We control for household characteristics like age,education, gender, household size, and ethnicity, as well as region fixed effects,while obtaining these estimates. The coefficients are also robust to otherchanges in the base specification, such as adding the household controls in-teracted with the time dummy, and to adding household income in 1993 orprovince-level mean per capita income as additional regressors (regressionsavailable upon request).

We perform a variety of robustness checks for our results. Table 4, column3, reports the results when we restrict our sample to panel households only,who are interviewed in both 1993 and 1998, and use household fixed effectsto control for any time-invariant household characteristics. The results fromthis are similar to the ones for the full sample, although the coefficient issmaller in magnitude.11 This is not surprising, given that the attenuation biasof measurement error gets exacerbated in a panel regression.

We get very similar results when we use our speed of LUC issuance measureinstead of the level of issuance in 1998 as the main explanatory variable: theresults in table 4, column 4, indicate that if a province were to reach the50% issuance level 1 year earlier, households in that province would on averageincrease the relative area devoted to long-term crops by 1.3 percentage points(0.06 standard deviations). Further, our results are also robust to alternativemeasures of crop choice: we find positive and statistically significant resultswhen we use a dummy for whether the household cultivates any long-term

10 We should note that in the household surveys, some respondents answer questions about long-term crops by mentioning the number of trees they have rather than the area devoted to them.Our results are robust to several ways of converting trees to areas.11 The results are identical when we control for time-varying effects of household characteristics.



554

TAB

LE4

LAN

DR

IGH

TSA

ND

CR

OP

CH

OIC

E(S

AM

PLE

:R

UR

AL

HO

USE

HO

LDS)

A.

Diff

eren

ce-in

-Diff

eren

ceE

stim

ate

(Dis

cret

e)

%H

ous

eho

lds

wit

hLU

C

Bel

ow

Med

ian

( !80

%)

Ab

ove

Med

ian

(180

%)

Diff

eren

ce

1993

Surv

ey.1

017

.087

0�

.014

7(.0

347)

1998

Surv

ey.0

959

.137

2.0

413

(.038

2)D

iffer

ence

�.0

058

.050

2.0

560

(.014

9)(.0

132)

***

(.019

9)**

*

B.

Diff

eren

ce-in

-Diff

eren

ceE

stim

ate

(Co

ntin

uous

)

No

Co

ntro

ls(1

)R

egio

nFE

(2)

Pan

elH

ous

eho

lds

(3)

Alt

erna

tive

Land

Rig

hts

Mea

sure

(4)

Dis

cret

eM

easu

re(5

)%

Per

enni

al(6

)%

Frui

t(7

)

Land

rig

hts

#Ye

arp

1998

.080

***

.075

***

.053

*.0

13**

.148

*.0

41**

.034

**(.0

25)

(.025

)(.0

31)

(.005

)(.0

88)

(.021

)(.0

15)

Year

p19

98�

.033

�.0

33*

�.0

19�

.029

*.0

25�

.025

*�

.008

(.020

)(.0

17)

(.035

)(.0

17)

(.068

)(.0

13)

(.008

)La

ndri

ght

s.0

38�

.011

�.0

10*

�.0

87�

.003

�.0

08(.0

47)

(.027

)(.0

06)

(.094

)(.0

23)

(.010

)



555

Ag

eo

fho

useh

old

head

.002

***

.002

***

.004

***

.001

***

.001

***

(.000

)(.0

00)

(.001

)(.0

00)

(.000

)M

ale

hous

eho

ldhe

ad�

.020

**�

.021

**�

.010

�.0

17**

�.0

03(.0

10)

(.010

)(.0

15)

(.007

)(.0

05)

Year

so

fed

ucat

ion

of

head

.008

***

.008

***

.014

***

.005

***

.003

***

(.002

)(.0

02)

(.002

)(.0

01)

(.001

)H

ous

eho

ldsi

ze�

.002

�.0

03.0

11**

*�

.002

�.0

00(.0

02)

(.002

)(.0

04)

(.002

)(.0

01)

Maj

ori

tyet

hnic

gro

upd

umm

y.0

03.0

03�

.039

�.0

05.0

08(.0

30)

(.029

)(.0

58)

(.031

)(.0

08)

Tota

lare

acu

ltiv

ated

(#10

�5)

�.2

08**

�.2

14**

.127

�.0

56�

.151

***

(.090

)(.0

95)

(.104

)(.0

70)

(.046

)R

egio

nfix

edef

fect

sN

oYe

sN

oYe

sYe

sYe

sYe

sH

ous

eho

ldfix

edef

fect

sN

oN

oYe

sN

oN

oN

oN

oN

o.

of

ob

serv

atio

ns7,

469

7,46

96,

012

7,46

97,

469

7,46

97,

469

No

.o

fp

rovi

nces

5959

5959

5959

59R

2.0

1.2

2.8

1.2

2.0

7.2

2.0

6

No

te.

Dep

end

ent

vari

able

pP

rop

ort

ion

of

tota

lcu

ltiv

ated

area

dev

ote

dto

per

enni

alin

dus

tria

lcr

op

san

dfr

uit

cro

ps.

Stan

dar

der

rors

are

inp

aren

thes

es,

corr

ecte

dfo

rp

rovi

nce-

leve

lcl

uste

ring

.A

llre

gre

ssio

nsar

ew

eig

hted

by

sam

plin

gw

eig

hts.

“Lan

dri

ght

s”is

the

pro

vinc

e-le

vel

pro

po

rtio

no

fho

useh

old

sho

ldin

ga

Land

Use

Cer

tific

ate

(LU

C).

Reg

ress

ion

(5)u

ses

anal

tern

ativ

em

easu

reo

flan

dri

ght

s:th

esp

eed

ofr

egis

trat

ion

mea

sure

,whi

chis

2001

min

usth

eye

arin

whi

chLU

Cis

suan

cecr

oss

es50

%.“

Dis

cret

em

easu

re”

equa

lso

neif

the

hous

eho

ldre

po

rts

cult

ivat

ing

any

per

enni

alcr

op

san

d/o

rfr

uit

tree

san

dze

roo

ther

wis

e.%

per

enni

alis

the

pro

po

rtio

no

fto

talc

ulti

vate

dar

ead

evo

ted

top

eren

nial

ind

ustr

ialc

rop

s.%

frui

tis

the

pro

po

rtio

no

fto

talc

ulti

vate

dar

ead

evo

ted

tofr

uit

cro

ps.

*Si

gni

fican

tat

10%

.**

Sig

nific

ant

at5%

.**

*Si

gni

fican

tat

1%.




crops, as well as when we analyze multiyear crops and fruit crops separately.Finally, we should note that the coefficient on the land rights variable ( ina2

eq. [5]) is usually negative, consistent with the results reported in table 3.We thus feel that any bias in our estimates is likely to be downward ratherthan upward.

Another reason why our results are likely to be underestimates is the in-stitutional setting in Vietnam. While there is a fair amount of free choicegiven to households in choosing their crops, there are two main constraints.First, there can be externalities that might lead to restrictions on changingcrops: a typical example of this is the planting of a tree that might cast ashadow on the neighbor’s crops. Second, until recently, provincial level au-thorities planned aggregate crop allocations for food security purposes. Beyondthese minimum quotas, districts and then communes would not receive stricterdirectives in terms of crop choice. Both of these obviously limit the size ofthe impact we can hope to find.

Given that regulatory and other concerns might result in provincial gov-ernment influences on crop choice, we would like to verify that our resultsare not driven wholly by such influences. One way to do this is to directlycontrol for government involvement in agricultural activity. For this, we com-pute agricultural areas cultivated by state farms for each province, using the1994 Agricultural Census. We then use this variable as a control in ourregressions. As can be seen in appendix table A1, our main coefficients ofinterest are largely unchanged and, in fact, are slightly larger than in the basespecification.

B. Labor ChoiceThe 1993 land law is found to have had a significant impact on the numberof weeks worked in nonfarm activities per working member in the household(table 5). Our base estimates from panel B, column 3, indicate that a householdin a high LUC-issuance province increases its nonfarm activity by 2.7 weeksper working member between 1992–93 and 1997–98. The most commonnonfarm activities reported by households in the VLSS were sales in markets,food processing, woodworking, and work in the textiles and garment industry.In terms of standard deviations, our estimates mean that a one standard de-viation increase in the level of LUC issuance would increase nonfarm weeksworked per household member by 0.06 standard deviations. While the estimatemay not be too large in terms of weeks worked per household member, itcorresponds to an increase of between 11 and 12 weeks worked in the nonfarmsector for the household, as the average number of working members in thehousehold was 4.37 in 1992–93 and 4.46 in 1997–98.



Do and Iyer 557

We perform robustness checks for these results in columns 4–6 in table 5,panel B. Results for panel households indicate an increase of 3.2 weeks workedper household member in the nonfarm sector (col. 4); this is quite close toour base estimate of 2.7 weeks. Our results are robust to using the speedmeasure of land rights: attaining the 50% level of LUC issuance one yearsooner results in an increase of 0.3 weeks worked per member in nonfarmactivities (col. 5). We also check the results using the number of hours workedper week in the previous 7 days as an alternative dependent variable. Theresults are fairly close to our base specification: assuming that households work8 hours a day and 52 weeks a year, the estimate of 0.365 hours per weekfrom column 6 translates to an increase of 2.37 weeks per year. Appendixtable A2 verifies that these results are not driven solely by state involvementin the economy, by controlling for the labor employed by state farms in 1994.

C. Results in Different SubsamplesTable 6 investigates these results further in different subsamples. The resultsseem to indicate that the land reform increased the proportional area devotedto long-term crops by a larger margin for households that owned more land(panel A, cols. 4 and 5). The impact is a little larger for households that livein communes where credit institutions are located nearby (cols. 6 and 7) andwhere there are alternative sources of credit available (cols. 8 and 9). Thisseems to indicate a role for credit institutions, though the estimates in columns6 and 8 are not statistically different from those in columns 7 and 9, respec-tively.12 We investigate the role of credit in greater detail in Section VII.B.The impact is also somewhat higher in provinces with more land inequalityin 1993 (cols. 10 and 11), indicating that the land distribution might playa role; we investigate this possibility further in Section VII.A. The results areremarkably similar across poor and rich households (cols. 2 and 3).

Similar analysis for the labor choice variable (table 6, panel B) indicatesthat the impact is very similar across poor and rich households but is greaterfor households having less land to begin with. The impact on labor choice ishigher for households living in communes in which credit institutions arefurther away and in which there are no alternative sources of credit: this isconsistent with the idea that nonfarm activities can be used as a consumption-smoothing device when credit markets do not function perfectly. The resultsare also somewhat higher in areas with higher land inequality. Again, as forcrop choice, none of these differences across subcategories is statistically sig-

12 The test of significance is based on combining these regressions and estimating triple interactioncoefficients. We chose to report separate regressions in the paper for expositional simplicity.



558

TAB

LE5

LAN

DR

IGH

TSA

ND

NO

NFA

RM

AC

TIV

ITIE

S(S

AM

PLE

:R

UR

AL

HO

USE

HO

LDS)

A.

Diff

eren

ce-in

-Diff

eren

ceE

stim

ate

(Dis

cret

e)

%H

ous

eho

lds

wit

hLU

C

Bel

ow

Med

ian

( !80

%)

Ab

ove

Med

ian

(180

%)

Diff

eren

ce

1993

Surv

ey8.

016

7.22

7�

.789

(1.1

7)19

98Su

rvey

8.34

69.

043

.697

(1.2

1)D

iffer

ence

.330

1.81

61.

486

(.586

)(.3

28) *

**(.6

66)*

**

B.

Diff

eren

ce-in

-Diff

eren

ceE

stim

ate

(Co

ntin

uous

)

No

Co

ntro

ls(1

)

Ho

useh

old

Cha

ract

eris

tics

(2)

Reg

ion

FE(3

)

Pan

elH

ous

eho

lds

(4)

Alt

erna

tive

Land

Rig

hts

Mea

sure

(5)

Dep

end

ent

Vari

able

p

Ho

urs

Mea

sure

(6)

Land

rig

hts

#Ye

arp

1998

3.27

2***

2.80

8**

2.68

5**

3.46

2**

.299

*.3

65*

(1.1

94)

(1.1

58)

(1.1

46)

(1.3

46)

(.157

)(.1

96)

Year

p19

98�

1.32

2�

1.03

0�

.941

�.8

02�

.211

�.1

31(.9

44)

(.895

)(.8

89)

(2.2

15)

(.722

)(.1

29)

Land

rig

hts

�1.

547

�2.

911

�3.

306

�.4

02�

.368

(2.3

54)

(2.2

41)

(2.3

60)

(.343

)(.3

12)

Ag

eo

fho

useh

old

head

�.0

29**

�.0

31**

�.0

32**

�.0

05**

*(.0

12)

(.013

)(.0

13)

(.002

)



559

Mal

eho

useh

old

head

1.89

9***

1.91

9***

1.92

9***

.185

***

(.492

)(.4

83)

(.478

)(.0

62)

Year

so

fed

ucat

ion

of

head

.376

***

.380

***

.379

***

.042

***

(.066

)(.0

65)

(.063

)(.0

09)

Ho

useh

old

size

�.2

89**

*�

.293

***

�.2

93**

*�

.017

(.094

)(.0

89)

(.090

)(.0

13)

Maj

ori

tyet

hnic

gro

upd

umm

y3.

921 *

**3.

358*

*3.

303*

*.5

69**

*(.9

12)

(1.2

79)

(1.2

47)

(.171

)D

umm

yfo

rN

ort

h�

2.77

2 **

(1.0

52)

Reg

ion

fixed

effe

cts

No

No

Yes

No

Yes

Yes

Ho

useh

old

fixed

effe

cts

No

No

No

Yes

No

No

No

.o

fo

bse

rvat

ions

8,09

18,

091

8,09

16,

835

8,09

18,

094

No

.o

fp

rovi

nces

5959

5959

5959

R2

.00

.06

.07

.77

.07

.06

No

te.

Dep

end

ent

vari

able

pN

umb

ero

fw

eeks

wo

rked

inno

nfar

mac

tivi

ties

(per

wo

rkin

gm

emb

er)i

nth

ela

st12

mo

nths

.Sta

ndar

der

rors

are

inp

aren

thes

es,c

orr

ecte

dfo

rp

rovi

nce-

leve

lcl

uste

ring

.A

llre

gre

ssio

nsar

ew

eig

hted

by

sam

plin

gw

eig

hts.

“Lan

dri

ght

s”is

the

pro

vinc

e-le

vel

pro

po

rtio

no

fho

useh

old

sho

ldin

ga

Land

Use

Cer

tific

ate

(LU

C).

Reg

ress

ion

(5)u

ses

anal

tern

ativ

em

easu

reo

fla

ndri

ght

s:th

esp

eed

of

reg

istr

atio

nm

easu

re,w

hich

is20

01m

inus

the

year

inw

hich

LUC

issu

ance

cro

sses

50%

.“H

our

sm

easu

re”

isth

enu

mb

ero

fho

urs

wo

rked

inno

nfar

mac

tivi

ties

(per

wo

rkin

gm

emb

er)

inth

ep

revi

ous

7d

ays.

*Si

gni

fican

tat

10%

.**

Sig

nific

ant

at5%

.**

*Si

gni

fican

tat

1%.



560

TAB

LE6

LAN

DR

IGH

TS,

CR

OP

CH

OIC

E,

AN

DLA

BO

RC

HO

ICE

IND

IFFE

RE

NT

SUB

CA

TEG

OR

IES

(SA

MP

LE:

PAN

EL

HO

USE

HO

LDS)

1993

Inco

me

Qui

ntile

1993

Land

Ho

ldin

gD

ista

nce

toC

red

itIn

stit

utio

nsA

lter

nati

veC

red

itP

rovi

ncia

lLan

dG

ini

Bas

eSp

ecifi

cati

on

(1)

q3

(2)

13

(3)

!7,

000

Squa

reM

iles

(4)

17,

000

Squa

reM

iles

(5)

kmq

5 (6)

km1

5 (7)

Yes

(8)

No

(9)

Low

(10)

Hig

h(1

1)

A.

Dep

end

ent

Vari

able

pP

rop

ort

ion

of

Tota

lCul

tiva

ted

Are

aD

evo

ted

toP

eren

nial

Ind

ustr

ialC

rop

san

dFr

uit

Cro

ps

Land

rig

hts

#Ye

arp

1998

.053

*.0

51*

.052

.047

*.0

60.0

60*

.046

.110

*.0

34.0

30.1

17(.0

31)

(.029

)(.0

49)

(.029

)(.0

42)

(.032

)(.0

55)

(.058

)(.0

35)

(.026

)(.0

74)

Year

p19

98�

.014

�.0

19�

.003

�.0

07�

.022

�.0

10�

.015

�.0

47�

.004

�.0

12�

.036

(.020

)(.0

17)

(.036

)(.0

16)

(.027

)(.0

20)

(.035

)(.0

44)

(.021

)(.0

19)

(.049

)H

ous

eho

ldfix

edef

fect

sYe

sYe

sYe

sYe

sYe

sYe

sYe

sYe

sYe

sYe

sYe

sN

o.

of

ob

serv

atio

ns6,

012

3,62

02,

392

3,03

02,

962

2,70

03,

252

1,38

44,

568

3,48

22,

530

R2

.80

.77

.83

.81

.80

.81

.79

.75

.82

.78

.80

B.

Dep

end

ent

Vari

able

pN

umb

ero

fW

eeks

Wo

rked

inN

onf

arm

Act

itiv

itie

sin

Last

12M

ont

hs,

per

Wo

rkin

gM

emb

er

Land

rig

hts

#Ye

arp

1998

3.24

6**

2.90

0*2.

886

3.92

1*2.

295

2.91

6*3.

584*

2.86

33.

422*

*3.

027*

*3.

653

(1.2

94)

(1.6

39)

(3.5

89)

(2.0

30)

(1.5

58)

(1.6

03)

(2.0

05)

(4.7

71)

(1.6

94)

(1.5

11)

(2.4

45)

Year

p19

98�

.824

�.3

91�

.937

�1.

328

�.0

45�

.405

�1.

195

�.7

95�

.838

�.9

83�

.714

(1.1

32)

(1.3

71)

(2.7

71)

(1.7

55)

(1.2

35)

(1.2

71)

(1.7

86)

(4.0

97)

(1.4

29)

(1.4

14)

(1.9

01)

Ho

useh

old

fixed

effe

cts

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

.o

fo

bse

rvat

ions

6,83

54,

545

2,29

03,

307

3,04

73,

026

3,68

61,

647

5,06

53,

687

3,14

8R

2.7

6.8

0.8

7.7

3.7

1.7

7.7

5.7

6.7

6.7

4.7

9

No

te.

Stan

dar

der

rors

are

inp

aren

thes

es,

corr

ecte

dfo

rp

rovi

nce-

leve

lcl

uste

ring

.A

llce

llsre

flect

resu

lts

of

reg

ress

ions

of

the

dep

end

ent

vari

able

on

land

rig

hts.

“Lan

dri

ght

s”is

the

pro

vinc

e-le

vel

pro

po

rtio

no

fho

useh

old

sho

ldin

ga

Land

Use

Cer

tific

ate

(LU

C).

1993

inco

me

qui

ntile

sar

eb

ased

on

hous

eho

ldex

pen

dit

ure.

Low

erq

uint

iles

imp

lyp

oo

rer

hous

eho

lds.

“Dis

tanc

eto

cred

itin

stit

utio

ns”

isth

eav

erag

ed

ista

nce

toal

lcre

dit

inst

itut

ions

inth

eco

mm

une,

mea

sure

dfr

om

the

Peo

ple

’sC

om

mit

tee

of

the

com

mun

e.“A

lter

nati

vecr

edit

”re

fers

toth

ep

rese

nce

of

acr

edit

inst

itut

ion

inth

eco

mm

une

that

isno

ta

go

vern

men

tb

ank.

All

reg

ress

ions

are

for

pan

elho

useh

old

so

nly.

*Si

gni

fican

tat

10%

.**

Sig

nific

ant

at5%

.



Do and Iyer 561

nificant, so the results are only indicative and not conclusive. In the nextsection, we investigate the mechanisms behind our main results more closely.

VII. What Are the Mechanisms at Work?In the previous section, we found an increase in long-term investments, mea-sured by the percentage of agricultural land devoted to long-term perennialcrops, as well as an increase in labor devoted to nonagricultural activities. Inthis section, we try to deepen our understanding of the mechanisms underlyingthe observed transition, based on our results in Section III.

A. Land MarketsAnalysis of land market transactions is complicated by the possibility of sub-stantial underreporting by respondents. This is both because land transactionswere illegal before the land law of 1993 (but were nevertheless taking placeon an informal basis) and because there was a high tax (10%) imposed onland transactions until 1999.13 Nevertheless, there is an increase in reportedland market transactions between 1993 and 1998: the proportion of householdsthat report receiving land increases tenfold from 2.5% in 1993 to 25% in1998, and a similar tenfold increase is seen for households reporting sales ofland (from 1% to 10%). This could, however, simply reflect less underreportingafter the law was passed. The increase does not seem to be very different acrosshigh-issuance versus low-issuance provinces (see table 7). The participation ofhouseholds in the land rental market also increases between 1993 and 1998but, again, is not systematically related to the progress of land certificateissuance (results not shown).14 Our theoretical framework and the results ofthe next section suggest that this is most probably because of credit constraints,although it is possible that the initial allocation itself was the optimal one,as suggested by Ravallion and van de Walle (2003).

A province-level analysis of land distribution also suggests that there is notmuch difference between provinces with high and low LUC issuance (see table8). Province-level Gini coefficients of land ownership decline over time (panelA). The decrease is mainly for provinces in the South (from 0.58 to 0.50) thatstarted at much higher levels of inequality than the North, where the Giniremains constant at around 0.37. There is no difference in the change in Giniby province LUC issuance levels. Further, there is not much evidence that

13 Authors’ conversation with GDLA officials (July 2001).14 We should note that the data on renting are not fully comparable across the two surveys: the1993 survey asks separately about land rented in and land sharecropped, while the 1998 surveydoes not ask about sharecropping. In our analysis, we include sharecropping as part of land rentedin.



562

TAB

LE7

LAN

DR

IGH

TSA

ND

LAN

DTR

AN

SAC

TIO

NS

Dis

tanc

eto

Cre

dit

Inst

itut

ions

Alt

erna

tive

Cre

dit

No

Co

ntro

ls(1

)R

egio

nFE

(2)

Pan

elH

ous

eho

lds

(3)

Alt

erna

tive

Land

Rig

hts

(4)

kmq

5 (5)

kmQ

5 (6)

Yes

(7)

No

(8)

A.

Dep

end

ent

Vari

able

p1

IfH

ous

eho

ldR

epo

rts

Acq

uiri

ngLa

ndin

Last

One

Year

Land

rig

hts

#Ye

ar19

98.0

03.0

19�

.023

.001

.096

4�

.171

0.3

970*

*�

.141

0(.0

96)

(.097

)(.1

42)

(.012

)(.1

416)

(.200

2)(.1

540)

(.156

1)La

ndri

ght

s.0

02.0

08.0

01(.0

12)

(.042

)(.0

06)

Year

p19

98.2

21**

*.2

09**

*.2

27**

.219

***

.146

8.3

371*

*�

.106

1.3

154*

*(.0

67)

(.070

)(.0

99)

(.053

)(.0

962)

(.145

9)(.0

985)

(.109

7)H

ous

eho

ldch

arac

teri

stic

sN

oYe

s…

Yes

……

……

Reg

ion

fixed

effe

cts

No

Yes

…Ye

s…

……

…H

ous

eho

ldfix

edef

fect

sN

oN

oYe

sN

oYe

sYe

sYe

sYe

sO

bse

rvat

ions

8,10

88,

108

6,84

88,

108

3,03

13,

694

1,64

95,

076

R2

.10

.15

.57

.15

.57

.57

.58

.57



563

B.

Dep

end

ent

Vari

able

p1

IfH

ous

eho

ldR

epo

rts

Selli

ngLa

ndin

Last

One

Year

Land

rig

hts

#Ye

arp

1998

�.0

86�

.079

�.0

93�

.011

�.0

775

�.1

482

.070

1�

.166

8*(.0

55)

(.057

)(.0

77)

(.008

)(.0

831)

(.122

9)(.0

732)

(.094

9)La

ndri

ght

s.0

11*

�.0

02.0

01(.0

06)

(.013

)(.0

02)

Year

p19

98.1

56**

*.1

49**

*.1

67**

*.1

36**

*.1

680*

*.2

053*

*.0

562

.218

5(.0

45)

(.047

)(.0

64)

(.038

)(.0

655)

(.102

9)(.0

578)

(.077

2)H

ous

eho

ldch

arac

teri

stic

sN

oYe

s…

Yes

Reg

ion

fixed

effe

cts

No

Yes

…Ye

s…

……

…H

ous

eho

ldfix

edef

fect

sN

oN

oYe

sN

oYe

sYe

sYe

sYe

sO

bse

rvat

ions

8,10

88,

108

6,84

88,

108

3,03

13,

694

1,64

95,

076

R2

.04

.05

.53

.05

.52

.54

.51

.54

No

te.

Stan

dar

der

rors

are

inp

aren

thes

es,

corr

ecte

dfo

rp

rovi

nce-

leve

lcl

uste

ring

.A

llre

gre

ssio

nsar

ew

eig

hted

by

sam

plin

gw

eig

hts.

“Lan

dri

ght

s”is

the

pro

vinc

e-le

vel

pro

po

rtio

no

fho

useh

old

sho

ldin

ga

Land

Use

Cer

tific

ate

(LU

C).

“Dis

tanc

eto

cred

itin

stit

utio

ns”

isth

eav

erag

ed

ista

nce

toal

lcre

dit

inst

itut

ions

inth

eco

mm

une,

mea

sure

dfr

om

the

Peo

ple

’sC

om

mit

tee

of

the

com

mun

e.“A

lter

nati

vecr

edit

”re

fers

toth

ep

rese

nce

of

acr

edit

inst

itut

ion

inth

eco

mm

une

that

isno

ta

go

vern

men

tban

k.“H

ous

eho

ldco

ntro

ls”

incl

ude

age,

gen

der

,an

ded

ucat

ion

of

hous

eho

ldhe

ad;

hous

eho

ldsi

ze;

ethn

icit

y;an

da

dum

my

for

No

rth.

Reg

ress

ions

(5)–

(8)

are

for

pan

elho

useh

old

so

nly.

*Si

gni

fican

tat

10%

.**

Sig

nific

ant

at5%

.**

*Si

gni

fican

tat

1%.




TABLE 8LAND RIGHTS AND LAND INEQUALITY (SAMPLE: PROVINCES)

% Households with LUC

Below Median(!80%)

Above Median(180%) Difference

A. Province Gini coefficient:1993 .4730 .4762 .0033

(.0467)1998 .4439 .4371 �.0069

(.0383)Difference �.0290 �.0391 �.0102

(.0425) (.0424) (.0603)B. Proportion of landless in province:

1993 .1191 .1159 �.0032(.0403)

1998 .0706 .0695 �.0011(.0277)

Difference �.0485 �.0464 .0021(.0350) (.0337) (.0486)

Note. Standard errors are in parentheses. Gini coefficients are computed by the authors from household-level data on landholdings.

formalizing land rights creates increasing landlessness, because people are nowable to sell land in times of need (table 8, panel B). The proportion of landlesshouseholds decreases from 11.4% to about 7% overall, but the trends aresimilar across high-issuance and low-issuance provinces.

B. Credit MarketsAs outlined earlier, the land reform can affect crop choice both by increasingthe incentive to invest in long-term crops and by making access to creditmarkets easier as farmers can now pledge land as collateral for a loan. Inparticular, having a pledgeable land-use certificate might be expected to in-crease a household’s access to credit from formal sources such as banks andcredit cooperatives. Table 9, however, shows that the issuance of LUCs doesnot lead to households being more likely to have an outstanding loan. Ap-proximately half of all households in our sample have outstanding loans (51%in 1993 and 54% in 1998): the probability of having a loan is 11 percentagepoints lower for households in high-issuance provinces (panel A, col. 2). Thisdifference is, however, statistically insignificant. Households in highly regis-tered provinces also do not show an increase in the proportion of loans fromformal sources (panel B), nor do they show any increase in the amount theyborrow (results available on request). We also see that households in communeswith lower access to credit institutions show a marginally significant declinein the probability of having an outstanding loan over this period (panel A,col. 6).



Do and Iyer 565

Overall, we do not find evidence that the 1993 land law resulted in increasedaccess to credit, which is somewhat surprising given that the right to mortgagewas one of the rights conferred by the law. However, in practice, it is veryhard for banks to seize land in cases of default, partly because regulations todeal with defaulting households had not been fully clarified at that time andalso because commune officials were not likely to support transfers of land topeople outside the village. Thus the usual practice in case of default, of theVietnam Bank of Agriculture and Rural Development, for instance, was totry and reschedule the loans or to stop lending to the defaulting householdin future.15

C. Within Households or Between Households?

Our model predicts that under the assumption of perennials being a labor-saving technology, the shift toward perennials should take place alongside adiversification of labor off the farm. An alternative mechanism implies spe-cialization across households: some households would specialize in agriculture,while others would devote time to off-farm employment. In order to findadditional evidence to discriminate these two potential channels, we testwhether households that undertake crop changes are also the same householdsthat devote more time off the farm. The results in table 10 indicate that thechanges in crop choice and labor choice documented in Section VI occur mainlywithin households, lending little support for a specialization channel. Weconduct this analysis as follows: we restrict attention to panel households andcompute the change in crop and labor choices between 1992–93 and 1997–98.Depending on whether these differences are positive (denoted 1) or nonpositive(denoted 0), households are divided into four categories (00, 01, 10, and 11,respectively).16 We then conducted a multinomial logit regression of thiscategorical variable on the measure of land rights, where the base category(denoted 00) was chosen to be the category of households that did not increaseeither their multiyear crop cultivation or their nonfarm weeks of work. Table9 reports the relative risk ratios that indicate how much more likely we areto observe a given category rather than the base category. In particular, anincrease of the level of LUC issuance from 0% to 100% makes it 3.169 timesmore likely for a given household to be of category 11 than of category 00.The transition toward the two other categories (namely, 01 and 10) is notsignificant. These results, together with those of Section VII.A, suggest that

15 Authors’ conversation with Vietnam Bank for Agriculture and Rural Development officials (July2001).16 The medians of such differences are close to zero.



566

TAB

LE9

LAN

DR

IGH

TSA

ND

CR

ED

IT

Dis

tanc

eto

Cre

dit

Inst

itut

ions

Alt

erna

tive

Cre

dit

No

Co

ntro

ls(1

)

Ho

useh

old

Cha

ract

eris

tics

�R

egio

nFE

(2)

Pan

elH

ous

eho

lds

(3)

Alt

erna

tive

Land

Rig

hts

(4)

kmq

5 (5)

km1

5 (6)

Yes

(7)

No

(8)

A.

Dep

end

ent

Vari

able

p1

IfH

ous

eho

ldH

asO

utst

and

ing

Loan

s

Land

rig

hts

#Ye

arp

1998

�.1

11�

.107

�.0

87�

.013

.047

�.2

41*

.009

�.1

02(.0

71)

(.073

)(.0

93)

(.009

)(.0

92)

(.135

)(.1

57)

(.102

)La

ndri

ght

s.0

35�

.002

….0

18…

……

…(.0

70)

(.061

)…

(.009

) *…

……

…Ye

arp

1998

.110

.125

.091

.106

.003

.198

*�

.016

.114

(.054

) **

(.055

)**

(.071

)(.0

41)*

*(.0

67)

(.104

)(.1

38)

(.074

)H

ous

eho

ldch

arac

teri

stic

sN

oYe

sN

oYe

sN

oN

oN

oN

oH

ous

eho

ldfix

edef

fect

sN

oN

oYe

sN

oYe

sYe

sYe

sYe

sO

bse

rvat

ions

8,10

88,

108

6,68

68,

108

2,93

03,

688

1,61

85,

000

R2

.00

.06

.24

.05

.63

.61

.63

.61



567

B.

Dep

end

ent

Vari

able

pP

rop

ort

ion

of

Bo

rro

win

gfr

om

Form

alSo

urce

s

Land

rig

hts

#Ti

me

.061

.063

.075

.011

.071

.058

.358

�.0

23(.0

89)

(.090

)(.1

93)

(.015

)(.2

61)

(.257

)(.4

78)

(.155

)La

ndri

ght

s.2

25**

*.2

10**

*�

.017

�.0

26.2

45**

(.065

)(.0

66)

(.010

)(.3

68)

(.119

)Ye

arp

1998

�.0

54�

.124

**.1

81.2

10**

*.1

30.2

39(.0

73)

(.057

)(.1

38)

(.063

)(.1

91)

(.193

)H

ous

eho

ldco

ntro

lsN

oYe

s…

Yes

……

……

Reg

ion

fixed

effe

cts

No

Yes

…Ye

s…

……

…H

ous

eho

ldfix

edef

fect

sN

oN

oYe

sN

oYe

sYe

sYe

sYe

sO

bse

rvat

ions

4,31

54,

315

3,57

04,

315

1,57

91,

980

971

2,58

8R

2.0

9.1

1.7

5.1

1.7

4.7

6.7

2.7

6

No

te.

Stan

dar

der

rors

are

inp

aren

thes

es,

corr

ecte

dfo

rp

rovi

nce-

leve

lcl

uste

ring

.A

llre

gre

ssio

nsar

ew

eig

hted

by

sam

plin

gw

eig

hts.

“Lan

dri

ght

s”is

the

pro

vinc

e-le

vel

pro

po

rtio

no

fho

useh

old

sho

ldin

ga

Land

Use

Cer

tific

ate

(LU

C).

“Dis

tanc

eto

cred

itin

stit

utio

ns”

isth

eav

erag

ed

ista

nce

toal

lcre

dit

inst

itut

ions

inth

eco

mm

une,

mea

sure

dfr

om

the

Peo

ple

’sC

om

mit

tee

of

the

com

mun

e.“A

lter

nati

vecr

edit

”re

fers

toth

ep

rese

nce

of

acr

edit

inst

itut

ion

inth

eco

mm

une

that

isno

ta

go

vern

men

tban

k.“H

ous

eho

ldco

ntro

ls”

incl

ude

age,

gen

der

,an

ded

ucat

ion

of

hous

eho

ldhe

ad;

hous

eho

ldsi

ze;

ethn

icit

y;an

da

dum

my

for

No

rth.

Reg

ress

ions

(5)–

(8)

are

for

pan

elho

useh

old

so

nly.

*Si

gni

fican

tat

10%

.**

Sig

nific

ant

at5%

.**

*Si

gni

fican

tat

1%.




TABLE 10ARE CROP AND LABOR CHANGES WITHIN OR ACROSS HOUSEHOLDS? (SAMPLE: PANEL HOUSEHOLDS)

Category 01(Dcrop choice ,q 0Dlabor choice )1 0

Category 10(Dcrop choice ,Q 0Dlabor choice )q 0

Category 11(Dcrop choice ,1 0Dlabor choice )1 0

Land rights 1.1935* 1.749 3.169**(.6928) (.8240) (1.523)

Note. Table shows relative risk ratios obtained from multinomial logit regressions of the dependentvariable on the land rights measure. Dependent variable is categorical with four categories: category00 (Dcrop choice , Dlabor choice ), category 01 (Dcrop choice , Dlabor choice ), categoryq 0 q 0 q 0 1 010 (Dcrop choice , Dlabor choice ), and category 11 (Dcrop choice , Dlabor choice ), where1 0 q 0 1 0 1 0Dcrop choice p change in proportion of household cultivated area devoted to perennial industrialcrops and fruit crops, between 1993 and 1998. Dlabor choice p change in number of weeks worked(per household member) in nonfarm activities, between 1993 and 1998. The base category is category00 (Dcrop choice , Dlabor choice ). “Land rights” is the province-level proportion of householdsq 0 q 0holding a Land Use Certificate (LUC). Standard errors are in parentheses, corrected for province-levelclustering. All regressions are weighted by sampling weights.* Significant at 10%.** Significant at 5%.

the changes we observe in crop and labor choices occur more within householdsthan between households.

D. Income and ConsumptionAn improvement in the security of tenure is expected to translate into increasedlifetime income and expenditure. However, the relatively short time lag be-tween the implementation of the 1993 land law and the 1997–98 surveymight suggest that we do not capture steady-state outcomes but, rather,transitional outcomes. This is especially true because investments in crops suchas tea or coffee yield returns only after a minimum of 3 or 4 years. In theabsence of credit constraints, the transition toward cultivation of perennialcrops increases permanent income, which should translate to an increase incurrent consumption. Such an absence of credit constraints corresponds to therate of time preference and the rate of interest being equal for the household.17

However, when credit constraints are binding, consumption along the tran-sition path can decrease: if investment prospects are good enough, then agentswill accept a drop in consumption in the first period to enjoy higher incomesin the second period (see “Result 3” in Sec. III).

Table 11 shows results obtained from the estimation of (5), in which theleft-hand-side variables of interest are real household expenditure and a measureof farm income. We find no significant effect of the 1993 land law on eitherof these outcomes. This, together with the results of Section VII.B, indicatethat the land law has not been very effective in alleviating credit constraintsfor rural households. The absence of any effect on consumption can admittedly

17 We thank an anonymous referee for pointing this out.



Do and Iyer 569

TABLE 11IMPACT OF LAND RIGHTS ON EXPENDITURE, INCOME, AND PRODUCTIVITY

(SAMPLE: RURAL HOUSEHOLDS)

Dependent Variable:Real Household

Expenditure

Dependent Variable:Value of AgriculturalOutput / Cultivated

Area

Units 1998 dongs (’000)1998 dongs (’000)/

square mile cultivatedMean (SD) in 1993 5,414.04 (3,480.40) .7985 (2.342)Mean (SD) in 1998 10,293.81 (5,885.25) 1.659 (6.728)Land rights #

Year p 1998 495.222 490.478 .691 .723(625.744) (599.934) (.470) (.470)

Year p 1998 4,486.901*** 4,511.802*** .323 .302(490.666) (473.702) (.227) (.233)

Land rights 37.810 336.781 .221 .338(323.907) (322.540) (.203) (.223)

Household controls Yes Yes Yes YesRegion fixed effects No Yes No YesObservations 7,501 7,501 7,466 7,466R2 .44 .46 .01 .02

Note. Standard errors are in parentheses, corrected for province-level clustering. All regressions areweighted by sampling weights. “Land rights” is the province-level proportion of households holding aLand Use Certificate (LUC). “Household controls” include age, gender, and education of household head;household size; ethnicity; and a dummy for North.*** Significant at 1%.

be caused by an attenuation bias due to measurement error. But beyond thisconcern, the results described in this paragraph are consistent with a transitioneconomy with credit constraints and imperfect consumption smoothing.

VIII. ConclusionVietnam’s 1993 land law made land rights secure, pledgeable, and tradableand was implemented by means of an extensive rural land-titling program.We show that this reform had a statistically significant impact on the decisionsof households to undertake long-term agricultural investments and at the sametime devote labor to nonfarm activities. However, these results were not verylarge in magnitude; in particular, issuing land titles to all households wouldresult in only a 0.3 standard deviation increase in the proportion of landdevoted to long-term crops. We find no significant impact on overall householdconsumption expenditure or agricultural income.

We tested several mechanisms that can account for this transition in therural economy. We found no evidence that land titles increased access to crediton the part of rural households; neither were they significant determinants ofland market activity. We also find no evidence that the 1993 land law resultedin major changes in the land distribution in Vietnam. We conclude that the




results we observe stem primarily from increasing the security of tenure ofthe landholders, the formal title being interpreted as a guarantee against futureexpropriation by the state. Another conclusion of our study is that imple-menting land-titling programs without complementary changes in the bank-ing system and the rules regarding land transactions is not likely to result indramatic changes in the rural economy. This conclusion is subject to twocaveats related to the short period of our analysis: first, the increases in in-vestment we observe are likely to yield greater returns in the future, and wemay thus be underestimating the gains from this land reform. Second, wecannot rule out the possibility that the reform might lead to significant changesin the functioning of the land and credit markets over time, thereby allowinghouseholds to capture the full benefits of formal land titles.

AppendixEquilibrium OutcomesWe solve the model set out in Section III as follows.

Borrowing and consumption decisions. As lenders break even in equilibrium,agents internalize their default decisions so that and : default∗ ∗t p 1 d p 0does not occur on the equilibrium path. Savings and borrowings are thusperfect substitutes, and we adopt the convention that , with a negative∗S p 0value of denoting net savings. The incentive-compatibility constraint for∗Bthe borrower determines her pledgeable income or, formally, ∗B ≤

. Consumption decisions are such that time and∗ ∗ ∗bh( p , r m ) T p 0 T p 1budget constraints are binding:

∗ ∗ ∗ 0 ∗ ∗ ∗ ∗C p B � h(m � m ) � f(n ) � g(r , (1 � r )m ),0∗ ∗ ∗ ∗ ∗{ C p (1 � a)h( p , r m ) � B ,1

and the level of savings/borrowings allows individuals to smooth consumptionacross time periods:

∗ ∗ ∗ ∗ ∗B p min [bh( p , r m , W )], (A1)

in which equalizes and . Thus, credit markets have two functions:∗ ∗ ∗W C C0 1

smooth consumption over time when land purchases need to be paid up-frontor when intermediate consumption needs to be financed when householdsadopt perennial crops.18

Labor and crop choices. When credit access is unrestricted, labor allocations

18 We ignore any potential set-up cost that perennials will require. They are assimilated to op-portunity costs of intermediate consumption.



Do and Iyer 571

are determined by the equalization of marginal productivity of labor with theprevailing wage rate, which is normalized to one. Thus, for given areas

and dedicated to perennials and rice cultivation, respectively,∗ ∗ ∗ ∗r m (1 � r )mthe first-order conditions imply:

∗ 1/1�g ∗ ∗p p [(1 � a)gH] r m. (A2)∗ 1/1�j ∗ ∗{ r p (jG) (1 � r )m

Since consumption can be perfectly smoothed over time, only total outputmatters. Constant returns to scale implies that only one crop is going to becultivated: and∗r � {0, 1}

1 1∗ 1/1�j 1/1�gp p 0 ⇔ (jG) ≥ [g(1 � a)H] . (A3)j g

Then, we can rewrite (A2) as

1 11/1�g ∗ 1/1�j 1/1�g[(1 � a)gH] m , 0 if (jG) ! [g(1 � a)H]( )∗ ∗( p , r ) p (A4)j g1/1�j ∗ ∗{ 0, (jG) (1 � r )m otherwise.( )

When credit constraints bind , optimal crop and labor∗(b p 0 p1 B p 0)choices will trade off the opportunity cost of intermediate consumption againsthigher final consumption levels. The first-order conditions are now

∗ 1/1�j ∗ ∗r p (jG) (1 � r )m , (A5)

while

∗� � C0∗ ∗ ∗ ∗ ∗ ∗g(r , (1 � r )m ) p h( p , r m ) (A6)∗�l �l C1

and

∗� � C0∗ ∗ ∗ ∗ ∗ ∗g(r , (1 � r )m ) p h( p , r m ) . (A7)∗�m �m C1

The left-hand sides of (A6) and (A7) capture the opportunity cost of movingaway from rice, while the right-hand side measures the gains due to increasedperennial crop cultivation. As consumption is not smoothed across periods,second-period consumption is valued relatively less than in the first-best case.If (A3) holds, then households dedicate land and labor to rice cultivation andsave in order to smooth consumption over time. Otherwise, access to creditallows households to borrow against future earnings, so that they dedicateland and labor to perennial cultivation.




Otherwise, when perennials are more productive but credit is not available,consumption cannot be financed by credit. As ∗T p 0 (�/�l)g(r , (1 �

, the ratio of consumption levels is equal to∗ ∗r )m ) p 1

∗� C0∗ ∗ ∗h( p , r m ) p 1,∗�l C1

so that, after rearranging, we obtain

g 1 � j∗ 1/1�j ∗ ∗p p (jG) r m , (A8)1 � g j

and

g 1 � j∗ 1/1�j ∗ ∗ ∗n p 1 � (jG) 1 � r � r m . (A9)[ ]1 � g j

The optimal crop allocation is then given by

∗ ∗ ∗ 0 ∗ ∗r p arg max ln [ f(n ) � h(m � m ) � g(r , (1 � r)m )]r

∗ ∗� ln [(1 � a)h( p , rm )].

The first-order conditions give the following optimal crop choice as an interiorsolution

∗ 0[1 � h(m � m )](1 � g)∗r p � g. (A10)1/1�j ∗(1 � j/j)(jG) m

Combining (A3) and (A10), we obtain result 1.Suppose that is such thatpre 1/1�j pre 1/1�ga (1/j)(jG) ≥ (1/g)[g(1 � a )H] p

. Given (2), a decrease in a eventually makes perennial crops morepre1 r p 0attractive than rice. Thus, households either entirely or partially shift towardperennials, so that the share of land devoted to perennial crops unambiguouslyincreases.

pre postr ! r .

Labor choice. On the labor market, , so that off-farmpre 1/1�j prer p (jG) m

activities are given by

pre 1/1�j pren p 1 � (jG) m .

When transition takes place with access to credit, then

post post 1/1�g postn p 1 � [(1 � a )gH] m ,



Do and Iyer 573

so that off-farm employment increases if and only if

1/1�j pre post 1/1�g post(jG) m ≥ [(1 � a )gH] m .

In the aggregate, land area is unchanged, so that, by linearity, aggregate off-farm employment increases if and only if

1/1�j post 1/1�g(jG) ≥ [(1 � a )gH] .

A necessary condition for this to hold is that , that is, perennials needj 1 g

to be comparatively less labor intensive than rice cultivation in order to savelabor when shifting away from rice.

In the presence of credit constraints, off-farm employment is given by

g 1 � jpost 1/1�j post post postn p 1 � (jG) 1 � r � r m[ ]1 � g j

so that an individual will increase off-farm employment if and only if

g 1 � jpost post post pre1 � r � r m ≤ m .[ ]1 � g j

In the aggregate, implies that ,post postj 1 g 1 � r � (g/1 � g)(1 � j/j)r ! 1so that

post pren ≥ n .� �Consumption choices. We have seen that transition creates the demand to

borrow in order to smooth consumption over time as the newly adoptedperennial crop delivers output only in period . The result is reinforcedT p 2by the need to borrow in order to cover set-up costs (not modeled here) orto purchase land. When households have access to credit, they maximizeaggregate output and consumption is perfectly smoothed across periods. Thus,when ,postb p 1

post pre post preC 1 C and C 1 C .0 0 1 1

The result might differ when credit constraints are binding. As agents tradeoff the marginal utility of consumption against the marginal utilityT p 0of consumption, they might decrease consumption in order toT p 1 T p 0enjoy more wealth at the second period. To see this, let us formally comparepre-land-law and post-land-law consumption levels. Prereform, assum-T p 0




ing that , agriculture consists exclusively of rice, so thata p 0

1 � jpre 1/1�j preC p 1 � (jG) m .0 [ ]j

In the presence of credit constraints and in the absence of any land sales orpurchases, consumption is determined by (A5) and (A9).

g 1 � jpost 1/1�j post post postC p 1 � (jG) 1 � r � r m0 [ ]1 � g j

11/1�j post post� (jG) (1 � r )m[ ]

j

1 � j g1/1�j post post postp 1 � (jG) (1 � r ) � r m ,[ ]j 1 � g

so that if , thenpre postm p m

post preC 1 C .0 0

As farmers decide to partially move away from rice, agricultural output atnecessarily drops, which translates into a drop in consumption as creditT p 0

market access is restricted. If we relax the assumption that , thenpostb p 0households can borrow against agricultural output, so that consumptionT p 1does not necessarily drop and eventually increases along the transition path.

Land allocation. When land is entirely devoted to either rice or perennials,the agricultural production function exhibits constant returns to scale, so thatland distribution is irrelevant. On the other hand, in the presence of creditconstraints and crop diversification, the optimal allocation of land equalizesmarginal product of land across households. The price of the marginal pieceof land is such that the marginal farmer owning is indifferent between∗m

selling, purchasing, or keeping his piece of land. In the presence of creditconstraints, land sales and purchases trade off the increased agricultural outputagainst the marginal utility of consumption as land purchases need toT p 0be financed out of retained earnings. Demand and supply∗ 0 0(m 1 m ) (m 1

of land is then driven by∗m )

∗ ∗ ∗ 0 ∗ ∗m p arg max ln [ f(n ) � h(m � m ) � g(r , (1 � r )m)]m

∗ ∗� ln [(1 � a)h( p , r m)],

where h is such that , and equilibrium labor and crop investments∗� m p 1are given by (A5), (A8), (A9), and (A10) and are all functions of m. First-



Do and Iyer 575

order conditions are such that

∗df dg d C0∗ ∗ ∗ ∗ ∗[n (m)] � [r (m), (1 � r (m))m] � h[ p (m), r (m)m] p h. (A11)∗dm dm dm C1

The left-hand side of (A11) captures the marginal utility gain from increasingland area, while the cost is land price h.



576

TABLE A1LAND RIGHTS AND CROP CHOICE (ROBUSTNESS CHECKS)

BaseSpecification

(1)

% State FarmArea(2)

Controlling for% State FarmAgricultural

Area(3)

ProvincialCompetitive-ness Index

(4)

Land rights # Year p 1998 .075*** .087*** .078*** .095***(.025) (.028) (.025) (.030)

Year p 1998 �.033* �.060** �.046** .139**(.017) (.023) (.019) (.065)

Land rights �.011 �.019 �.016 �.025(.027) (.033) (.027) (.037)

Age of household head .002*** .002*** .002*** .002***(.000) (.000) (.000) (.000)

Male household head �.020** �.019 �.017* �.020**(.010) (.011) (.010) (.010)

Years of education of head .008*** .008*** .008*** .008***(.002) (.002) (.002) (.002)

Household size �.002 �.002 �.002 �.003(.002) (.002) (.002) (.002)

Majority ethnic group dummy .003 �.000 .004 .000(.030) (.028) (.031) (.030)

Total area cultivated (# 10�5) �.208** �.265*** �.212** �.205**(.090) (.083) (.082) (.090)

% state farm area 1994 2.783(1.889)

% state farm area 1994 # Year p

1998 1.445(1.085)

% state farm agricultural area .745**(.366)

% state farm agricultural area #

Year p 1998 .274(.196)

PCI .003(.002)

PCI # Year p 1998 �.004**(.001)

Region fixed effects Yes Yes Yes YesHousehold fixed effects No No No NoNo. of observations 7,469 6,253 7,469 7,469No. of provinces 59 56 59 59R2 .22 .21 .25 .22

Note. Standard errors are in parentheses, corrected for province-level clustering. All regressions areweighted by sampling weights. “Land rights” is the province-level proportion of households holding aLand Use Certificate (LUC). All state farm variables are computed from the 1994 Agricultural Census. %State farm area is the proportion of total province area devoted to state farms. % State farm agriculturalarea is the ratio of state farm agricultural area to total province agricultural area. PCI is the ProvincialCompetitiveness Index 2006.* Significant at 10%.** Significant at 5%.*** Significant at 1%.



577

TABLE A2LAND RIGHTS AND NONFARM ACTIVITIES (ROBUSTNESS CHECKS)

Controlling for

BaseSpecification

(1)

Labor Employedin State Farms

(2)

ProvincialCompetitiveness

Index(3)

Land rights # Year p 1998 2.685** 2.831** 2.880**(1.146) (1.142) (1.301)

Year p 1998 �.941 �3.455 .739(.889) (2.365) (2.398)

Land rights �3.3.6 �1.331 �3.099(2.360) (.916) (2.430)

Age of household head �.031** �.031** �.031**(.013) (.013) (.013)

Male household head 1.919*** 1.920*** 1.921***(.483) (.483) (.485)

Years of education of head .380*** .381*** .381***(.065) (.065) (.066)

Household size �.293*** �.296*** �.291***(.089) (.089) (.089)

Majority ethnic group dummy 3.358** 3.342** 3.474**(1.279) (1.286) (1.325)

Labor employed in state farms 1994 .010(.007)

Labor employed in state farms #

Year p 1998 1994 �.014(.009)

PCI �.032(.073)

PCI # Year p 1998 �.035(.052)

Region fixed effects Yes Yes YesHousehold fixed effects No No NoNo. of observations 8,091 8,091 8,091No. of provinces 59 59 59R2 .07 .07 .07

Note. Dependent variable p Number of weeks worked in nonfarm activities (per working member) inthe last 12 months. Standard errors are in parentheses, corrected for province-level clustering. All re-gressions are weighted by sampling weights. “Land rights” is the province-level proportion of householdsholding a Land Use Certificate (LUC). All state farm variables computed from the 1994 AgriculturalCensus. “Labor employed in state farms” is the ratio of the number of workers employed in state farmsto the number of agricultural households in province. PCI is the Provincial Competitiveness Index 2006.** Significant at 5%.*** Significant at 1%.




ReferencesAcemoglu, Daron, Simon Johnson, and James A. Robinson. 2001. “The Colonial

Origins of Comparative Development: An Empirical Investigation.” American Eco-nomic Review 91, no. 5:1369–1401.

Alston, Lee, Gary Libecap, and Robert Schneider. 1996. “The Determinants andImpact of Property Rights: Land Titles on the Brazilian Frontier.” Journal of Law,Economics and Organization 12, no. 1:25–61.

Asian Development Bank. 1998. “Vietnam Land Information System and Agricul-tural Taxation Study.” Working Paper TA 2225-VIE, Asian Development Bank,Manila.

Benjamin, Dwayne, and Loren Brandt. 2004. “Agriculture and Income Distributionin Rural Vietnam under Economic Reforms: A Tale of Two Regions.” In EconomicGrowth, Poverty and Welfare: Policy Lessons from Vietnam, ed. Paul Glewwe, NishaAgrawal, and David Dollar. Washington, DC: World Bank.

Bertrand, Marianne, Esther Duflo, and Sendhil Mullainathan. 2004. “How MuchShould We Trust Differences-in-Differences Estimates?” Quarterly Journal of Eco-nomics 119, no. 1:249–76.

Besley, Timothy. 1995. “Property Rights and Investment Incentives: Theory andEvidence from Ghana.” Journal of Political Economy 103, no. 5:903–37.

Boothroyd, Peter, and Pham Xuan Nam. 2000. Socioeconomic Renovation in Vietnam:The Origin, Evolution and Impact of Doi Moi. Ottawa: International DevelopmentResearch Center.

Boucher, Steve, Brad Barham, Michael Carter, and Juan Sebastian Chamorro. 2002.“Market-Friendly Reforms and the Operation of Credit and Land Markets inCentral America.” Photocopy, Agricultural and Resource Economics Department,University of California, Davis.

Braselle, Anne-Sophie, Frederic Gaspart, and Jean-Philippe Platteau. 2002. “LandTenure Security and Investment Incentives: Puzzling Evidence from Burkina Faso.”Journal of Development Economics 67:373–418.

Deininger, Klaus, and Songqing Jin. 2003. “Land Sales and Rental Markets inTransition: Evidence from Rural Vietnam.” World Bank Policy Research WorkingPaper 3013, World Bank, Washington, DC.

De Soto, Hernando. 2000. The Mystery of Capital: Why Capitalism Triumphs in theWest and Fails Everywhere Else. New York: Basic.

Dollar, David, and Jennie Litvack. 1998. “Macroeconomic Reform and Poverty Re-duction in Vietnam.” In Household Welfare and Vietnam’s Transition, ed. DavidDollar, Paul Glewwe, and Jennie Litvack. Washington, DC: World Bank.

Feder, Gershon, Tongroj Onchan, Yongyuth Chalamwong, and C. Hangladoran.1986. Land Policies and Farm Productivity in Thailand. Baltimore: Johns HopkinsUniversity Press.

Field, Erica. 2003. “Entitled to Work: Urban Property Rights and the Labor Supplyin Peru.” Photocopy, Department of Economics, Harvard University.

Field, Erica, and Maximo Torero. 2004. “Do Property Titles Increase Credit Accessamong the Urban Poor? Evidence from Peru.” Photocopy, Department of Eco-nomics, Harvard University.

Galiani, Sebastian, and Ernesto Schargrodsky. 2006. “Property Rights for the Poor:



Do and Iyer 579

Effects of Land Titling.” Photocopy, Business School, Universidad Torcuato DiTella.

Haque, T., and L. Montesi. 1996. “Tenurial Reforms and Agricultural Developmentin Vietnam.” Land Reform Bulletin, Food and Agricultural Organization, Rome.

Hayami, Yujiro. 1994. “Strategies for the Reform of Land Property Relations.” InAgricultural Policy Analysis for Transition to a Market-Oriented Economy in Viet Nam,ed. R. Barker, 9–59. FAO Economic and Social Development Paper 123. Rome:Food and Agriculture Organization.

Knack, Steven, and Philip Keefer. 1995. “Institutions and Economic Performance:Cross-Country Tests Using Alternative Measures.” Economics and Politics 7:207–27.

Ngo, Thi Minh-Phuong. 2005. “Establishing a Quasi-Private Property Rights Sys-tem: Tenure Security and Investment Incentives in Vietnam.” Photocopy, LondonSchool of Economics.

North, Douglass C., and Robert P. Thomas. 1973. The Rise of the Western World: ANew Economic History. Cambridge: Cambridge University Press.

Pingali, Prabhu L., and Vo-Tong Xuan. 1992. “Vietnam: Decollectivization and RiceProductivity Growth.” Economic Development and Cultural Change 40, no. 4:697–718.

Ravallion, Martin, and Dominique van de Walle. 2003. “Land Allocation in Viet-nam’s Agrarian Transition.” World Bank Policy Research Working Paper 2951,World Bank, Washington, DC.

SMERU Research Team. 2002. “An Impact Evaluation of Systematic Land Titlingunder the Land Administration Project (LAP).” Photocopy, SMERU ResearchInstitute, Jakarta.

Vo, Dang Hung. 1997. “Land Administration Reform in Vietnam.” Paper presentedat the Federation Internationale des Geometres (International Federation of Sur-veyors) Commission 7 Symposium, Madison, WI.

Wiegersma, Nancy. 1988. Vietnam: Peasant Land, Peasant Revolution: Patriarchy andCollectivity in the Rural Economy. New York: St. Martin’s.



land titling and rural transition in vietnam

Documents