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Multidimensional urban poverty estimates in vietnamese central cities

UNIVERSITY OF ECONOMICS
HO CHI MINH CITY
VIETNAM

INSTITUTE OF SOCIAL STUDIES
THE HAGUE
THE NETHERLANDS

VIETNAM - NETHERLANDS
PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

MULTIDIMENSIONAL URBAN POVERTY ESTIMATES IN
VIETNAMESE CENTRAL CITIES

BY
NGUYEN VAN CUONG

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, JANUARY 2012


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UNIVERSITY OF ECONOMICS
HO CHI MINH CITY
VIETNAM

INSTITUTE OF SOCIAL STUDIES
THE HAGUE
THE NETHERLANDS

VIETNAM - NETHERLANDS
PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

MULTIDIMENSIONAL URBAN POVERTY ESTIMATES IN
VIETNAMESE CENTRAL CITIES

A thesis submitted to partial fulfilment of the requirements for the degree of
MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By
NGUYEN VAN CUONG

Academic Supervisor:
Dr. NGUYEN HUU DUNG

HO CHI MINH CITY, JANUARY 2012

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ACKNOWLEDGEMENT

The thesis has benefited from inputs and comments of many people who the
author wishes to thank for their valuable contribution in various stages of the research.
Dr. Nguyen Huu Dung (University of Economics Ho Chi Minh City - Viet Nam), who
has been giving instructions and fruitful suggestions all the time of research for and
writing of this thesis. Mr. Nguyen Chau Thoai (Ho Chi Minh University of Natural
Resource and Environment - Viet Nam) who supported the author extracting the data
from VHLSS 2008.


Author would like to give the profound gratitude to his family and others giving
great encouragement for study. In the end, author would like to express the warmest
thanks to all beloved Professors in the Vietnam – The Netherlands Programme for
Master Degree in Development Economic program who transferred the valuable
knowledge during the course of study in MDE class 16.

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ABSTRACT

The thesis estimates multidimensional poverty in five urban central cities in Viet
Nam, namely Ha Noi, Hai Phong, Da Nang, Ho Chi Minh, and Can Tho by applying a
new approach developed by Alkire and Santos, using Vietnam Living Standard Survey
in 2008. There are five dimensions considered for estimation in urban central city
including education, health, standard of living, economic well-being, and employment
labor. Findings shows that multidimensional poverty is significant high in central cites,
especially in Ho Chi Minh City and that those multidimensional poor suffer from the
high deprivation intensity of indicators as type of dwelling, underemployment, housing
space, and working time. However, five urban central cities present non-depreciable
level of deprivation in electricity. When weights derived from the author’s estimation,
underemployment deprivation significantly increases its contribution as it receives a
higher weight. The thesis suggested an alternative approach for national poverty
measurement at multidimensional level as well as a tool for budget allocation.

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TABLE OF CONTENTS
CHAPTER I: INTRODUCTION
1.1. Problem statement ...................................................................................... 01
1.2. Research objectives ..................................................................................... 02
1.3. Research question ....................................................................................... 03
1.4. Research hypotheses ................................................................................... 03
1.5. Methodology ............................................................................................... 03
1.6. Research scope ............................................................................................ 03
CHAPTER II: LITERATURE REVIEW
2.1. Introduction ................................................................................................. 04
2.2. Basic concepts and definitions .................................................................... 04
2.3. Comparison between absolute and relative measurement .......................... 11
2.4. Theoretical framework related to MPI ........................................................ 12
2.5. Empirical studies related to dimensions and indicators of poverty ............ 14
CHAPTER III: DATA AND METHODOLOGY
3.1. Measurement of poverty ............................................................................. 21
3.1.1. Absolute measurement .................................................................. 21
3.1.2. Relative measurement by MPI ...................................................... 22
3.2. Study sites ................................................................................................... 27
3.3. Data requirements ....................................................................................... 27
CHAPTER IV: MULTIDIMENSIONAL POVERTY IN CENTRAL CITY
4.1. Overview of five central cities .................................................................... 34
4.2. Review of poverty in five urban central cities ........................................... 34
4.2.1. The poverty head count ratio in money-metric measure .............. 34

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4.2.2. The poverty ratio by Head count H in MPI measure .................... 34
4.2.3. Poverty comparison between money-metric and MPI .................. 35
4.3. Comparison urban poverty ratio in central cities by MPI measure ............ 38
4.4. Poverty comparison by indicators ............................................................... 41
CHAPTER V: CONCLUSIONS AND POLICY IMPLICATIONS
5.1 Summary ...................................................................................................... 61
5.2 Conclusions .................................................................................................. 62
5.3 Policy implications ....................................................................................... 62
REFERENCES ............................................................................................................ 66
APPENDICES ............................................................................................................. 72

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LIST OF CHARTS

Chart 4.1: Poverty ratio by money-metric and MPI measure ....................................... 35
Chart 4.2: Percentage of deprivation by indicator in urban central city ....................... 36
Chart 4.3: General poverty rate by urban and rural region ........................................... 37
Chart 4.4: Poverty rate in central city in 2006 and 2008 .............................................. 38
Chart 4.5: Comparison poverty rate between Head count H and Analytical result of
GSO from VHLSS 2008 ............................................................................................... 40
Chart 4.6: Percentage of deprivation by indicator in each central city ......................... 41
Chart 4.7: Comparison GSO and author’s result by type of dwellings ........................ 44
Chart 4.8: Percentage of chronic sickness by city ........................................................ 47
Chart 4.9: Percentage of working time by city ............................................................. 48
Chart 4.10: Percentage of adult illiteracy by city.......................................................... 49
Chart 4.11: Percentage of underemployment by city .................................................... 50
Chart 4.12: Percentage of drinking and cooking water by city..................................... 51
Chart 4.13: Percentage of assets by city ....................................................................... 52
Chart 4.14: Percentage of home ownership by city ...................................................... 53
Chart 4.15: Percentage of years of schooling by city ................................................... 54
Chart 4.16: Percentage of under-schooling 6 – 15 by city ............................................ 55
Chart 4.17: Percentage of hospital payment by city ..................................................... 56
Chart 4.18: Percentage of average expenditure by city ................................................ 57

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LIST OF TABLES AND FIGURES

Table 2.1: General poverty line by Ministry of Labors, Invalids and Social Affair ..... 10
Table 2.2: Specific poverty line in five central cities ................................................... 10
Table 3.1: Dimensions, indicators, cutoffs and weights of the MPI ............................. 25
Table 3.2: Number of surveyed households in five central cities ................................. 28
Table 3.3: Indicators, definition, and file to extract indicators .................................... 30
Table 4.1: The Head count H, average intensity of MPI poverty ................................. 39
Table 4.2: Percentage of households having type of house .......................................... 42
Table 4.3: Percentage of households having type of house .......................................... 43
Table 4.4: Housing space per capita by type of house, city, and region ....................... 45
Table 4.5: Housing space per capita by type of house, city, and region ....................... 46
Table 4.6: Percentage of households using main sources of lighting ........................... 58
Table 4.7: Percentage of households using main sources of lighting ........................... 58
Table 4.8: Percentage of households having toilet by central city ............................... 59
Table 4.9: Percentage of households having toilet by central city ............................... 60
Figure 1: Diagram of components of the multidimensional poverty index from Alkire
and Santos (2010) .......................................................................................................... 13
Figure 2: Diagram of dimensions and indicators of the MPI ........................................ 24

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ACRONYMS
ADB

Agricultural Development Bank

GSO

General Statistics Office

HDI

Human Development Index

HHP

Household Prestige

MDG

Millennium Development Goal

MPI

Multidimensional Poverty Index

OSS

Occupational Status Score

VHLSS

Vietnam Household Living Standard Survey

VND

Vietnam Dongs

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CHAPTER I
INTRODUCTION
1.1. Problem Statement
The “poverty” always appears into all historical periods of each country and
each region. The poverty problems have been seen different perspectives. Many people
from developing countries usually think that developed countries have the availability
of enormous economic resources allowing these countries free of poor. In fact, the
poverty is a global issue not only in developing countries but also in developed
countries. For instance, the United State has over 12 percent of the population lives
below the official poverty line and over one fifth of the children growing in officially
poor family (Udaya Wagle, 2008). The developing countries have striven for poverty
alleviation through many different subsidization policies and programs. Moreover,
previous studies in developing countries often focused on rural areas to evaluate
poverty, inequality, and household living standard by traditional money-metric
measure. However, the researchers and policymakers have recognized that the poor
suffer from not only income or expenditure below the poverty line but also other
aspects. That’s why the researchers have tried to explore alternative approaches to
define the poor into many aspects. These new approaches such as the Household Asset
Index (Filmer and Pritchett 1998), the Occupational Status Score (OSS), the
Household Prestige (HHP) Score, and the capital SES, The Human Poverty Index
(OPHI and UNDP 2010) and Multidimensional Poverty Index (Alkire and Santos,
2010) have used to evaluate not only household living standard but socio-economic
position, chronic poverty, deprivations as well. In particular, the Multidimensional
Poverty Index (MPI) is the international measure used as an analytical tool to define
the most vulnerable people, measure deprivations directly and discover the
interconnections among severe deprivations that people face at the same time. The
results of previous researches using MPI measure have showed the differences among

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countries like Kerala, India that 16 percent of MPI poor people in comparison with 81
percent in the Indian state of Bihar. Especially MPI measure also provided the figure
that about 1.7 billion people in the countries searched lives in multidimensional
poverty. It exceeds the number of people in those countries estimated to live on US
$1.25 a day or less with 1.3 billion (Alkire and Santos 2010).
The poverty researches in Vietnam like other developing countries have just
concentrated on rural areas and defined determinants affecting poverty by traditional
money-metric measures. On the other hand, there are a few urban poverty researches
implemented. Therefore, urban poverty requires more attention from Vietnamese
researchers and policymakers because of the recent issues of urbanization. Fast Urban
population expansion causes the number of the poor bigger, many people live in slum
of big city, expanding the gap and inequality between the rich and the poor. These
issues will challenge significantly political conflict, uprising and social unstability in
the future. In addition, Vietnamese researchers have just relied on money-metric
measures to determine rural and urban poverty, with the exceptional of the research
conducted by Asselin and Vu (2009) having utilized the alternative measure to define
multidimensional poverty. This thesis implemented to examining the multidimensional
urban poverty in five central cities in Viet Nam, including Ha Noi, Hai Phong, Da
Nang, Ho Chi Minh and Can Tho, identifying deprivations of the poor, and suggesting
recommendation for policymakers in setting appropriate policies, for effectively
poverty reduction in the years to come.
1.2. Research Objectives
The thesis is conducted with the following objectives:
(i) Identify the severe deprivations of the poor households in central cities and
reveal interconnections among those deprivations.
(ii) Identify the urban poverty ratio in central cities by MPI measure, and
money-metric measure.

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(iii) Compare the urban poverty between five central cities by multidimensional
poverty index (MPI) measure, and suggest recommendation for policymakers to reduce
poverty in research areas.
1.3. Research questions
What deprivations affect mostly to urban poverty in five central cities in Viet
Nam by MPI measure?
Why is there the difference between poverty rate by MPI measure and moneymetric measure?
What do factors make the difference from poverty rate between five urban
central cities in Viet Nam?
1.4. Research hypotheses
The central hypothesis of the thesis is that urban poverty is similar among
central cities and there are many factors affecting to multidimensional poverty in five
central cities in Viet Nam. These factors include: years of schooling, under-schooling 6
– 15, adult illiteracy, hospital payment, working time, chronic sickness, electricity,
sanitation, cooking and drinking water, housing area, home ownership, assets, type of
dwelling, average expenditure per capita, and underemployment.
1.5. Methodology
The research employs MPI measure as the main tool to address the research
question. The main data is the secondary data extracted from the Vietnam Household
Living Standards Survey (VHLSS) 2008 of Vietnamese General Statistics Office.
1.6. Research scope
The thesis focuses on urban poverty in five central cities in Vietnam including
Ha Noi, Hai Phong, Da Nang, Ho Chi Minh and Can Tho only. Then only household’s
data of the Vietnam Household Living Standards Survey 2008 in those provinces are
employed for the analysis.

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CHAPTER II
LITERATURE REVIEW
2.1. Introduction
This chapter reviews literatures related to the “poverty” and consists of three
major sections. Firstly, basic concepts and definitions of poverty are discussed clearly.
Secondly, the theoretical framework related to Multidimensional Poverty Index (MPI)
will be presented. Finally, empirical studies related to dimensions and indicators of
poverty in Vietnam and some countries are discussed.
2.2. Basic concepts and definitions
2.2.1 Poverty
The concept of poverty is not so different in each country and also not a selfdefining. Experts and academics have given many definitions about poverty over time.
Poverty could be the lack of health care, nutrition, education, clean water, clothing, and
shelter for basic living standard. The anti-poverty conference in Asia-Pacific regions
held by ESCAP in September 1993 in Bangkok defined poverty as following “poverty
is the state that some part of the population cannot enjoy and satisfy the basic
necessities of human beings, those necessities recognized by society depending on the
different economic-social levels and local customs and habits” (Centre for Poverty
Reduction Bulletin Ho Chi Minh City, 1999, p.2). Poverty is also pronounced
deprivation in well-being (the World Development Report 2000/2001) or Poverty is
described like “Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and
not being able to see a doctor. Poverty is not having access to school and not knowing
how to read. Poverty is not having a job, is fear for the future, living one day at a time.
Poverty is losing a child to illness brought about by unclean water. Poverty is
powerlessness, lack of representation and freedom” (the World Bank 2010). The above
definitions about poverty include important points of the poor who have a lower living
standard than average living standard of community, not get the basis demands, and the

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lack of opportunity to take part in community development process, lack shelter and
clothing, to be sick and to be illiterate. Poor people are particularly vulnerable to
adverse events outside their control. The poor usually treated badly by the institutions
of state, society and excluded from voice and power in those institutions.
The definitions of urban poverty also have been suggested by experts and
researchers. Masika et al.(1997) thought that definition of urban poverty had no unity.
However, there were two common interpretations about poverty as economic and
anthropological interpretations. The first traditional economic interpretation use
income or consumption in accordance with many other social indicators including
nutrition, life expectancy, infant mortality, the share of household budget spent on
food, literacy, school enrolment rates, access to health clinics or drinking water, to
classify poor groups in comparison with a common index of material welfare. The
second anthropological interpretations developed broadly by rural anthropologists and
social planners who permit local fluctuation of the poor meaning, and extend the poor
definition containing perceptions of non-material deprivation and social differentiation.
In particular, many anthropological studies of poverty have shown that there was the
difference between the poor and experts regarding to conceptions of disadvantage and
the great value of these studies was qualitative dimensions including decision-making
freedom, security, independence, and legal and political rights, self-respect, identity,
close, and non-exploitative social relationships. Moreover, Zhou (2000) the definition
of urban poverty by poor interviewees in Beijing said that urban poverty has features as
low-education, unhealthy, aged, no relationship with “someone”, dedicated most of
their life to country’s development already and life condition with nothing, poor, live
on government relief.
Besides the definitions of poverty and urban poverty, the definition of
multidimensional poverty has also taken more attention of researchers and
policymakers. “A multidimensionally poor person who is if and only if having both

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economically deprived and socially deprived. A person is economically deprived if the
person’s income falls below the income cutoff as a shortfall in the space of income
(consumption, wealth). A person is socially deprived if any social achievement falls
below its respective cutoff. It focuses on the social dimensions pertaining to health,
education, and social protection, and is based on the assumption that each social
dimension is intrinsically important, and that an attainment below the respective cutoff
represents a denial of a basic human right” (Alkire and Foster, 2009). “The
multidimensional poor who suffer deprivation in multiple way including low levels of
income, illiteracy, relatively high levels of mortality, poor infrastructure, lack of voice
and poor access to resources as credit, land, water, and forests” (Mehta 2003, p.341).
2.2.2. Absolute poverty
Definition of absolute poverty has become global concerns of many experts and
social organizations. A general perspective of absolute poverty is not enough resources
to ensure basic living demands. However, McNamara (1973) who was the president of
World Bank group suggested that “absolute poverty is a condition of life so degraded
by disease, illiteracy, malnutrition, and squalor as to deny its victims basic human
necessities”. Moreover, a United Nations declaration from the World Summit on Social
Development in Copenhagen in 1995 stated that absolute poverty is a condition
characterized by severe deprivation of basic human needs including food, safe drinking
water, sanitation facilities, health, shelter, education and information. It depends not
only on income but also on access to services. In addition, Bellù and Liberati (2005,
p.4) referred to “absolute poverty as standard of living. In this case, poverty usually
measured by the value, in real terms, of a given level of goods ensuring some form of
minimum subsistence (e.g., the value of basic food or the minimum income required to
have decent lives)”. According to Gordon (2005, p.6) defined “absolute poverty was
characterized by severe deprivation any two of the following basic human needs (1)
Severe Food Deprivation - Body Mass Index 16 or below (severe underweight). (2)

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Severe Water Deprivation – access only surface water (e.g. rivers, ponds) for drinking
or living in household where the nearest source of water more than 15 minutes away –
30 minutes round trip (e.g. indicators of severe deprivation of water quality or
quantity). (3) Severe Deprivation of Sanitation Facilities - no access to a toilet of any
kind in the vicinity of their dwelling, e.g. no private or communal toilets or latrines. (4)
Severe Health Deprivation - Women who did not receive treatment for a recent serious
illness or who did not receive any antenatal care or who did not receive any assistance
with birth or who did not receive a tetanus inoculation during her pregnancy. Men who
did not receive treatment for a recent serious illness. (5) Severe Shelter Deprivation living in dwelling with four or more people per room (severe overcrowding) or in a
house with no flooring (e.g. a mud floor). (6) Severe Education Deprivation - youth
who never attended school and who are also illiterate. (7) Severe Information
Deprivation - no access to newspapers, radio or televisions or computers or phones at
home (e.g. no information sources)”. Combining and using the criteria given by
McNamara, Singer (2011) stated that “absolute poverty is a condition of life
characterized by malnutrition, illiteracy, disease, squalid surroundings, high infant
mortality, low life expectancy and the world can begin to abolish absolute poverty by
redistributing the produced food and other resources that need throughout the world in
more equal proportions”.
Absolute poverty data has determined statistically by different organizations and
experts year by year. According to the World Health Organization (1999) “about 20
percent of the world’s population, or 1300 million people, live in absolute poverty with
an income of less than US$ 1 per day. Surviving on less than US$ 2 per day is a reality
for almost half the people on the planet. Aggregate figures for economic growth
disguise the fact that the number of people in absolute poverty is still rising”. With a
reference to World Bank’s $1/day poverty line, Nielsen’s paper (2009) show that the
poverty rate fell from 15 percent in 1970 to 6 percent in 2000. The United State

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asserted that over 12 percent of the population lives below the official poverty line and
over one fifth of the children growing in officially poor families (Wagle, 2008).
2.2.3. Relative poverty
According to McNamara (1973, p.3), “the relative poverty means simply that
some countries are less affluent than other countries, or that some citizens of a given
country have less personal abundance than their neighbors. That has always been the
case, and granted the realities of differences between regions and between individuals,
will continue to be the case for decades to come”. In addition, Bellù and Liberati
(2005, p.4), the relative poverty refers to “a standard of living defined in relation to the
position of other people in the income or expenditure distribution. In this sense,
poverty is basically a phenomenon of inequality”. According to Đinh et al. (2008),
relative poverty is a status of person or a household that belongs to people group
having the lowest income in society with certain space and time.
Using a relative standards approach, Asian Development Bank (2006) defined
“the poor are those who gain when income becomes more evenly distributed and the
non-poor are those who lose. A major criticism of relative approach is that it will show
a reduction in poverty when the incomes of the poor are falling, as long as the incomes
of the non-poor are falling faster. A reduction (or increase) in poverty will show up
only if there is a change in the relative income distribution”. According to Nielsen
(2009), “relative poverty shown to have decreased significantly, but at the same time
there has been a worsening poverty outcome among up to one billion of the world's
poorest citizens”.
2.2.4. Poverty line
The poverty line or poverty threshold is the minimum level of income or
expenditure that is necessary to achieve a living standards of given country. In practice,
the poverty line in developed countries is significantly higher than in developing
countries. According to World Development Indicators (2008, p.1) provides “estimates

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of global poverty that are the first re-evaluation of the World Bank’s “$1 a day”
poverty line since 1999. The international poverty line has been recalibrated at $1.25 a
day, using new data on purchasing power parities (PPPs), compiled by the International
Comparison Program, and an expanded set of household income and expenditure
surveys”.
There are three ways to determine poverty lines such as the cost of basic needs,
food energy intake, and subjective evaluations. However, the most common method
used is the cost of basic needs. “It first estimates the cost of acquiring enough food for
adequate nutrition – usually 2,100 Calories per person per day and then adds on the
cost of other essentials such as clothing and shelter.” (World Bank Institute, 2005). In
accordance with Nielsen (2009), “the poverty line is a quintessential concept reflecting
society’s (the social planner’s) considered view as to what constitutes a minimum
acceptable level of income. The poverty line must obey the following constraint ∑ (y*
– yi) ≤ 0, were y* is the poverty line and yi is the income of person i. The highest
feasible poverty line is the arithmetic mean. At that level, the designated ‘poor’ are
those earning no more than the average and the designated ‘rich’ those earning more
than the average”.
The poverty line will be determined by each country and adjusted year-by-year.
The poverty line can be determined by total cost of all the essential resources that an
average human adult consumes in one year. The poverty line is useful economic tool to
measure poor people. Normally, the household poverty line defined by minimum
consumption or income and the household whose consumption falls below poverty line
are considered poor.
In Viet Nam, the general poverty line is built by Ministry of Labors, Invalids
and Social Affair. The private poverty line created by government agencies of each
area. The poverty line was built throughout different standards following six criteria in
establishment of new general poverty line during 2011 – 2015 period such as (1)

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Poverty line is built on scientific foundation (2) Based on foundation of basic
consumption need (3) Suitable and comparable with international countries and regions
(4) Priority to mountainous and rural area (5) Suitable with ability of budget balance
(6) Not making disordered and complicated to the local in process of organizational
surveys and objects identification.
Table 2.1: General poverty line by Ministry of Labors, Invalids and Social Affair
(Thousand VNĐ/person/month)
Poverty line

Mountain areas

Rural areas

Urban areas

1994-2000 period

55

70

90

2001-2005 period

80

100

150

2006-2010 period

200

260

2011-2015 period

400

500

Source: Decision No. 09/2011/QĐ-TTg from Prime Minister date 30/01/2011
Table 2.2: Poverty line in five central cities (Thousand VNĐ/person/month)
City name

Can Tho

Da Nang

Hai Phong

Ha Noi

Ho Chi Minh

Poverty line
Period

Rural areas

Urban areas

2006 – 2010

200

260

2011 – 2015

400

500

2005 – 2008

200

300

2009 – 2015

400

500

2006 – 2009

200

260

2010 – Until now

300

390

2005 – 2008

270

350

2009 – Until now

330

500

2005 - 2008

500

500

2009 – 2015

833

1,000

Source: Department of Labor, Invalids and Social Affairs in each city

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2.3. Comparison between absolute and relative measurement
Most of the economists and policymakers like to use traditional money-metric
measure (absolute measurement) or one money indicator like income, expenditure or
consumption to evaluate the poor household and living standards. The money-metric
measure easily used to determinate the poor household and broadly understood by the
public. In this case, the common assumption used that the household’s living standard
is determined by their well-being, and the data of income or expenditure are commonly
like proxy of consumption level utilized. However, only using of money-metric
measures to evaluate the household’s living standard, well-being or socio-economic
positions does not explain clearly how money household earned and how much
household spent, especially in developing countries. Furthermore, Sahn and Stifel
(2003) supplied that using the traditional money-metric measure will have some issues
that usually occur. Firstly, the quality of income and expenditure data is in middleincome and low-income countries is low. Secondly, these survey data of consumption
or income usually reply upon household’s recall and tend to be inaccurate. Thirdly, the
prices of commodity, nominal interest rates, and depreciation rates of semi-durable and
durable commodity are difficult to discern in constructing of consumption aggregates
or the use values of commodity consumed. Fourthly, the inflation rate tends to be high
and variable in developing countries, it makes consumer price indices unreliable.
Besides, regional and seasonal price indices in developing countries are significantly
variable and not easy to find. Fifthly, Purchasing power parity numbers are broadly
used for converting local currency into dollars. However, these numbers are rough
approximations and are subject to considerable error.
The alternative approaches as the household asset index, the Occupational
Status Score (OSS), the Household Prestige (HHP) score, and the capital SES, Human
Poverty Index and Multidimensional Poverty Index (MPI) are contrary with moneymetric measures. Especially the MPI approach identifies severe deprivations in which

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people experience at the same time and overlapping deprivations at household level
at many dimensions as standard of living, education, health, employment, and wellbeing.
In Vietnam, most of the previous studies used the money-metric methods to
define the poor. As the above limitations or disadvantages of money-metric methods,
this study use aims to explore another method to evaluate the multidimensional urban
poverty in central cities instead of using traditional money metric measure. It hoped
that the multidimensional poverty index would be used as either an alternative or a
complementary measure to classify household multidimensional poverty in central
cities.
2.4. Theoretical framework related to Multidimensional Poverty Index (MPI)
The poverty is measured by traditional money-metric measure or alternative
approaches like the asset index (Prakongsai, 2006), the adjusted headcount ratio
(Alkire and Foster, 2009), the Millennium Development Goals, the human
development index (Stanton, 2007), the multidimensional poverty index (Alkire and
Santos, 2010) ect,. The MPI measure is the international approach and is an index of
acute multidimensional poverty. It is very easy to calculate, interpret and satisfy many
desirable properties. The MPI reveals a different pattern of poverty than income
poverty, as it illuminates a different set of deprivations. The MPI has three dimensions
as health, education, and standard of living. These dimensions are measured by ten
indicators. Each dimension is equally weighted and each indicator within a dimension
is equally also weighted (Alkire and Santos, 2010).

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Figure 1: Diagram of components of the multidimensional poverty index

Source: Adopted from Alkire and Santos (2010)
Alkire and Santos (2010) has also showed that “MPI is the product of two
numbers including the Headcount (H) which is percentage of people who are poor, and
the average intensity of deprivation (A) which reflects the proportion of dimensions in
which households are deprived. The MPI reveals the combination of deprivations that
batter a household at the same time. A household is considered poor if it is deprived at
least 30 percent of the weighted indicators”. Moreover, the determination of ten
indicators in three dimensions is also defined by Alkire and Santos as followings “(1)
Education dimension has two indicators as years of schooling and child enrolment that
complement each other. Years of schooling acts as a proxy for the level of knowledge
and understanding of household members. Because the unit of analysis is the
household, all household members are considered non-deprived if at least one person
has five years of schooling. This variable follows the idea of effective literacy of Basu
and Foster (1998) that all household members benefit from the abilities of a literate
person in the household, regardless of each person’s actual level of education. (2)

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Health dimension was the most difficult to measure with two indicators as malnutrition
and child mortality. The first identifies a person as deprived in nutrition if anyone in
household is malnourished. The second indicator uses data on child mortality. The
death of a child is caused by infectious disease or diarrhea, and child malnutrition also
contributes to child death. All household members are considered to be deprived if
there has been at least one observed child death (of any age) in the household. (3)
Standard of living dimension has six indicators as drinking water, sanitation, cooking
fuel, electricity, assets, and floor. The present measure uses six indicators that represent
acute poverty. It includes three standard MDG indicators as drinking water, sanitation,
and cooking fuel. It also includes two non-MDG indicators as electricity and floor.
Both of these provide some rudimentary indication of the quality of housing for the
household. The final indicator covers the ownership of some consumer goods as radio,
television, telephone, bicycle, motorbike, car, truck and refrigerator”.
Alkire and Santos (2010) also suggested how to weigh the ten indicators.
“Empirically, equal weights for indicators within dimensions are not necessary. For
example Human Development Index (HDI) places a 2/3 weight on adult literacy and
1/3 on gross school attendance ratio. In the case of health dimension, it seems that
malnutrition and mortality are both important deprivations and it is not clear which is
the more important indicator. In the case of education, it could be argued that having
one person with five or more years of schooling was the most important outcome; yet
child school attendance is a time-sensitive input with long future returns, hence again
weighted them equally. Weighting the six asset indicators equally is admittedly more
difficult to justify and is also particularly important given that this is the dimension that
contributes most to poverty in the poorest countries”.
2.5. Empirical studies related to dimensions and indicators of poverty
The poverty researches implemented all over the world and the researchers have
striven to explore new approaches, besides the traditional method to define poor

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person, namely, money-metric measure by income or consumption level. A person
considered poor if his or her consumption or income level falls below some minimum
level that is necessary to meet basic needs. This minimum level usually called the
"poverty line", to measure poverty exactly and specifically in different aspects.
In Vietnam, many empirical studies on the domain of poverty have been carried
out by non-government organizations, international organizations, and researchers in
rural, remote, and mountainous areas, especially in the north, northwest and centre
highland at regional level, community, household and individual level. Moreover, these
studies have used the traditionally similar approach to find out determinants of poverty
as age of household head, household size, gender of household head, and education,
employment and occupation, afford to access to services and utilities (ADB, 2003; Vo,
T. T., 2004; Nguyen, X. M., 2005; Truong T. V., 2007; Phan T. L., 2010). Moreover,
study of Nguyen et al. (2005) in Vietnam showed that causes of poverty are risk of
agricultural production. The farm households are usually poorer than others. Nguyen
also showed that education affected strongly to poverty. People having low education
level are very difficult to get a good and stable job. Therefore, their income is low to
escape poverty. Education plays an important role in the process of poverty alleviation.
Besides, female householders are often poor households. High birth rate in the poor
households is due to consequence of poverty.
In the other side of the coin, there are a few studies implemented on urban
poverty in Viet Nam, especially in central city or in ‘the slums’ in large cities. Le
(2010) suggested the characteristics to identify the poor households and some attributes
to build urban poverty line in Ho Chi Minh city. These characteristics include: features
of members in household, job status, income, consumption, housing condition, the
perception of citizen about household’s poverty status. The findings presented
generally into two quantitative and qualitative groups that serve foundation to build
poverty line. The quantitative group included income and consumption. The qualitative

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