Working Paper
Social capital and household vulnerability

Using the Vietnam Access to Resources Household Survey (VARHS) with a panel of households present from 2008 to 2016, the study investigates the impact of social capital on household vulnerability.

The empirical results indicate that both commune shocks and household shocks are associated with the higher likelihood of having state-run group memberships, except for the case of the political party. Group membership is also strongly influenced by a number of household characteristics. Most importantly, participation in local organizations could reduce both households’ probability of being poor and the utility loss caused by covariate risks.

In addition, social capital shows its influence on some intermediate factors, which in turn contribute to the lower vulnerability at the household level. While participation in the Women Union or the Farmer Union reinforces the households’ ability to overcome negative shocks, the memberships of the Communist Party and the Farmer Union are associated with a higher level of saving. Members of the Communist Party are more likely to possess insurance, and members of the Women Union and the Farmer Union have better access to general information.

The findings imply that poverty reduction policies in rural Vietnam should consider the role of social capital, especially in the forms of group participation, as an effective informal coping strategy.