12 Ho Chi Minh City Open University Journal of Science–No.

5(1) 2015–June/2015

AN ASSESSMENT OF MULTIDIMENSIONAL URBAN POVERTY

IN VIETNAM CENTRAL CITIES

Nguyen Huu Dung1, Nguyen Van Cuong2

1
University of Economics Ho Chi Minh City
2
Graduate program of Vietnam and The Netherlands
Email: nhdung@[Link]
(Received:26/03/2015; Revised: 26/04/2015; Accepted: 19/05/2015)

ABSTRACT
Cross section data from the Vietnam Household Living Standard Survey 2008 (VHLSS-
2008) was used to estimate multidimensional poverty in five urban central cities (Ha Noi, Hai
Phong, Da Nang, Ho Chi Minh, and Can Tho) in Viet Nam following the methodology developed
by Alkire & Santos (2010). Five dimensions of poverty were considered in the study including
education, health, standard of living, economic well-being, and employment labor. The findings
show that multidimensional poverty is significantly high in central cities, especially in Ho Chi
Minh City. The multidimensional poor suffer from the high deprivation intensity of indicators as
type of dwelling, underemployment, housing space, and working time. Moreover, five urban
central cities present non-depreciable level of deprivation in electricity. Under-employment
deprivation significantly increases its contribution as it receives a higher weight in the
estimation. The study highlights the potential application of the methodology for national
poverty measurement at multidimensional level as well as a tool for state budget allocation.
Keywords: Multidimensional Poverty Index (MPI), urban poverty, deprivation intensity.

1. Introduction scholars have tried to explore alternative

The poverty problems have been seen approaches to define the poor into many
different perspectives in every historical aspects, not only household living standard but
period of country and region. Many people in socio-economic position, chronic poverty,
developing countries usually think that deprivations as well. In particular, using of the
developed countries have the availability of Multidimensional Poverty Index (MPI)
enormous economic resources allowing these approach is the international measure and
countries free of being poor. In fact, the analytical tool to define the most vulnerable
poverty is a global issue not only in people, measure deprivations directly and
developing countries but also in developed discover the interconnections among severe
countries. In the past, the researchers and deprivations that people face at the same time.
policymakers usually conducted poverty Most poverty studies in Vietnam like
studies focused on rural areas, especially in other developing countries have just
Vietnam, to evaluate poverty, inequality, and concentrated on rural areas, less in urban areas
household living standard by traditional and defined determinants affecting poverty by
money-metric measure. Recently researchers traditional money-metric measures. In the recent
have recognized that the poor suffer from not issues of urbanization, the demand of new
only income or expenditure below the poverty approach applied to evaluate poverty is really
line but also other aspects. Hence, many need and requires more attention from
 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015 13

Vietnamese researchers and policymakers. approach and is an index of acute

Therefore, this paper implemented to examining multidimensional poverty. It is very easy to
the multidimensional urban poverty in five calculate, interpret and satisfy many desirable
central cities in Viet Nam, including Ha Noi, properties. The MPI reveals a different pattern
Hai Phong, Da Nang, Ho Chi Minh and Can of poverty than income poverty, as it
Tho, identifying deprivations of the poor, and illuminates a different set of deprivations. The
suggesting recommendation for policymakers in MPI has three dimensions as health, education,
setting appropriate policies for effectively and standard of living. These dimensions are
poverty reduction in the coming years. measured by ten indicators. Each dimension is
2. Theoretical foundation related to equally weighted and each indicator within a
Multidimensional Poverty Index (MPI) dimension is equally also weighted (Alkire &
The MPI measure is the international Santos, 2010).
Nutrition

mortality
Children

school
Years of

enroled
Children

Cooking fuel

Toilet

Water

Electrition

Floor

Assets
standards
Living
Health

Education

Multidimensional
Poverty Index (MPI)

Figure 1. Components of the Multidimensional Poverty Index (MPI)

Source: Adopted from Alkire and Santos (2010)
According to Alkire & Santos (2010) urban poverty indicators in urban management
MPI is the product of two measures, namely, and poverty alleviation including incidence of
the Headcount (H) which is percentage of urban poverty, severity or urban poverty, depth
people who are poor, and the average intensity of urban poverty (poverty gap), household
of deprivation (A) which reflects the size, household composition, dependency
proportion of dimensions in which households burden, wage level, formal sector employment,
are deprived. The MPI reveals the combination child labor, housing production, floor area per
of deprivations that batter a household at the person, permanent dwelling units,
same time. A household is considered poor if unauthorized housing, access to public
it is deprived at least 30 percent of the transport by urban poor, average journey time
weighted indicators. to work, access to water by urban poor, access
3. Empirical studies related to to sewerage, average time spent in fetching
dimensions and indicators of poverty water, water quality, water quality, water
Moser et al. (1996) indicated the key supply reliability, sewage treatment rat,
14 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015

sewage reliability, access to solid waste inclusion (sub)dimensions unable to be

collection, access to electricity supply, access directly observed. These dimensions were
to education, access to health service, infant measured by using a set of observable
mortality, net enrollment rates in primary and indicators.
secondary schools, percent of income spent on, Santos and Ura (2008) estimated
infrastructure expenditure ratio, urban female, multidimensional poverty in Bhutanby using
gender wage equity, gender education 2007 Bhutan Living Standard Survey data.
differences, gender labor force participation There are five dimensions used for both rural
equity, woman owner, and asset ownership by and urban areas as income, education, room
women. availability, access to electricity and access to
In the assessment of city poverty, drinking water, and two additional dimensions
Hentschel and Seshagir (2000) has suggested used for only rural area as access to road and
the following groups of indicators: income land ownership.
poverty indicators regarding to poverty rate According to Asselin and Vu (2009),
(incidence), poverty gap, poverty severity or there were five dimensions to analyze dynamic
extreme poverty rate (incidence) or income poverty in Vietnam, namely health,
inequality measure. Health and Education employment, education, labor, and housing
Outcome indicators regarding tounder-five (environment).
mortality rate, infant mortality rate, maternal 4. Research methodology
mortality rate, life expectancy, malnutrition 4.1. Poverty measurement
rate of children, literacy rate, years of The study applied both absolute and
schooling. Access indicators regarding to relative poverty measurements for the
water, electricity, sanitation, garbage comparison and discussion of the estimated
collection or school and health facility or results.
social programs (nutrition, social assistance) or Absolute poverty measure by Head-count
service satisfaction. Non-Income Deprivation The head-count measure is the most
Indicators regarding to unemployment, popular and simplest measure to calculate the
violence, child labor, discrimination. percentage of the population whose incomes or
Baker and Schuler (2004) discussed the expenditures are below poverty line.
approaches to analyze urban poverty including
Income or Consumption Measures, Unsatisfied 1 N N0
Basic Needs Index, Asset Indicators, P0 = ∑ I(yi ≤ z) =
Vulnerability, Participatory methods. In India, N i=1 N
Mehta (2003) determined chronic poverty at Where:
379 districts level in 15 large states of India P0 is head-count ratio
via variables as illiteracy, infant mortality, low N0 is people below the poverty line
levels of agricultural productivity and poor N is people in the total population or
infrastructure reflecting persistent deprivation. total households
In Thailand, Prakongsai (2006) I(yi ≤ z) is indicator function which is
discussed the uncertainty of household income equal one when yi less than z and is equal zero
and expenditure data and the difficulties in when yi more than z. So if the expenditure (yi)
available data in Thailand to evaluate the is less then poverty line (z) when I(yi ≤ z) is
living standard, household socio-economic equal one and the household is defined poor.
positions by traditional money-metric The head-count ratio is a simple formula
measure. Then, the research tried to explore and easy to calculate. However, it doesn’t
the possibility of using household asset index point out magnitude, severity, and depth of
for assessing household poverty. poverty. The “poverty head count ratio” is
Wagle (2008) has given some indicators computed by identifying the proportion of the
of poverty dimensions including economic population that is poor.
well-being, capability, and three social Relative measurement by MPI
 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015 15

The Multidimensional Poverty Index intensity of MPI poverty across the poor (%).
(MPI) measure of Alkire and Santos (2010) is 4.2. Analytical framework
the newer alternative measure that created to Based on these above theoretical
calculate multiple deprivations and their foundation, empirical studies and the MPI
overlap. The MPI formula can be written in formula from Alkire and Santos (2010), the
general form as MPI = H x A, where H is general multidimensional function in the study
percentage of people who are MPI poor is f(k), where k is the total dimensions. The
(incidence of poverty), and A is average f(k) is as following:

f(k) = f[Education, Health, Standard of Living, Economic

well-being, Agriculture, Economy, Infrastructure, and
Employment labor, etc.]

The f(k) in this study has 5 dimensions

f(k) = f[Education, Health, Standard of Living, Economic well-
being, and Employment labor]

f(k) = f[sub(dimension) or indicators]

There are 15 indicators in the study

The poor deprived in at least 22 percent of the weighted

indicators or 02 dimensions (from two to eight indicators)
The study examines five dimensions of MPI poor in five urban central cities. Each
poverty including education, health, standard dimension is equally weighted and each
of living, economic well-being, employment indicator within the dimension is also equally
labor and excluding other dimensions such as weighted. The intent of determination of
agriculture, infrastructure, etc. due to the weight is like the original standard to evaluate
availability of information in VHLSS and in how each dimension and indicator affect to
urban cities. The following fifteens indicators multidimensional poverty and intensity of
in five dimensions are used to calculate the indicators affect to MPI poor.

15 Indicators

Average per Under-

Drinking and cooking water

capita employment
expenditure
Under-schooling 6 - 15
Years of schooling

Hospital payment

Type of dwelling
Home ownership
Chronic sickness
Adult illiteracy

Housing space
Working time

Electricity

Sanitation

Assets

Economic Employment
Education Health Standard of Living
well-being Labor

05 Dimensions

Figure 2. Diagram of dimensions and indicators of the MPI

16 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015

The multidimensional poverty in this The weight of indicators into dimensions

study has five dimensions, so k = 5 and 1/k or is also equal and presented in below table. For
20.00% is weight of each dimension. As the instance, weight of standard of living dimension
result, the five dimensions as education, is 1/5 and has seven indicators. Therefore,
health, standard of living, economic well- denominator of indicators in standard of living
being, and employment labor have equally dimension is 5*7 = 35, so the seven indicators
weight by 1/5. have equal weight by 1/35 or 2.86%.

Table 1. Dimensions, indicators, cutoffs and weights of the MPI

Relative
Dimension Indicator Deprived if…(cutoffs)
weight
Education Years of schooling: No household member has 1/15 or
Number of schooling years of completed five years of 6.67%
household members schooling
Under-schooling 6 – 15: At the household level, at least 1/15 0r
A child 6 – 15 years old is not one child is not going to school 6.67%
attending school.
Adult illiteracy At the household level, at least 1/15 or
A person with 15 years or more one adult member is illiterate 6.67%
who cannot read, write and do the
simple calculation is illiterate.
Health Hospital payment: Household member cannot pay 1/15 or
Household’s status having money hospital fees in any times 6.67%
to pay hospital fees or not
Working time: Household member has 1/15 or
Working hours of household head working time of main job more 6.67%
in a day than 8 hours per day
Chronic sickness: To be sick for at least one 1/15 or
Sickness status of household month out of a year or at least 6.67%
member one household member is
chronically sick
Standard of Electricity: Whether the household the household has no electricity 1/35 or
Living has electricity 2.86%
Sanitation: Household does not has an 1/35 or
Whether the household has improved toilet or if their toilet 2.86%
improved toilet is shared or toilet directly over
the water
Drinking and cooking water: The household using one of 1/35 or
The household using one of water as rain-water, river water, 2.86%
following water: rain-water, river lake water, pond water
water, lake water, well water, pond
water, bottle drinking water
Assets (owned by household): The household does not own 1/35 or
 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015 17

color television, wire telephone, more than one of: color 2.86%
cell phone, computer, refrigerator, television, wire telephone, cell
car or motorbike phone, computer, refrigerator,
car or motorbike
Housing space: The housing space per capita 1/35 or
less than the average housing 2.86%
The housing space per capita (m2) space per person was 10 square
meter
Home ownership: Whether the Household doesn’t own any 1/35 or
household owns any house house 2.86%
Type of dwelling: Types of house Household members live in 1/35 or
as permanent, temporary, semi- temporary or semi-permanent 2.86%
permanent and other house
Economic well- Average per capita expenditure The average expenditure is 1/5 or
being The average expenditure of lower than poverty line 20%
household
Employment Underemployment: A worker At the household level, at least 1/5 or
Labor considered as underemployment if one main worker is 20%
he has missed a job for 3 month or underemployment
more in the last year

4.3. Data realized welfare, whereas income is viewed as

Data for the study comes from measure of potential welfare (Sahn and Stifel,
Vietnamese Household Living Standard 2003). The expenditure contains spending on
Survey (VHLSS 2008) of General Statistical education, health care, consumption
Office (GSO). The survey collects much expenditure into anniversary or Tet (new
information regarding: demographic and year), durable using goods (car, color
household characteristics with age, gender, television, computer, fax machine, etc),
ethnic, income, expenditure, education, health housing, electricity and water, waste, and the
care, employment status, assets, housing, value of nominal consumption normalized to
credit, sanitation in both rural and urban areas. obtain real consumption.
VHLSS 2008 contains 45,945 households 5. Results and discussion
from 3,063 wards with 9,189 household’s 5.1. The head-count poverty ratio in
samples for assessing and analysis of income money-metric measure
and expenditure. In this study, only 555 1 N N0 2
households in urban central cities including Ha P0 = ∑ I(yi ≤ z) = = = 0.36%
Noi, Hai Phong, Da Nang, Ho Chi Minh, Can N i=1 N 555
Tho are extracted and used in the analysis.
Both income and expenditure can Based on the study data set (n=555), the
theoretically use to measure poverty. In this average expenditure of those households in
study, the average expenditure was applied each city was used to compare with private
since among the reasons, households are poverty line in order to determine the poor
usually willing to truthfully declare their people. As the result, there were only two
expenditure than their income, particularly households (N0 = 2) having the average
when dealing with government enumerators. expenditure below the poverty line. Therefore,
Moreover, expenditure can be viewed as the poverty head count ratio in money-metric
18 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015

measure is 0.36% by average expenditure. 5.3. Poverty comparison between

5.2. The poverty ratio by Head count money-metric and MPI measure
(H) in MPI measure The analysis shows that the urban
poverty ratio in MPI measure by
multidimensional level (16.40%) higher than
poverty ratio in money-metric measure by
average expenditure (0.36%) and those MPI
poor suffer from average deprivation 26.83%
The result of MPI measure through of indicators (Figure 3). The money-metric
fifteen indicators to define the MPI poor measure is simple and easy way to define the
showed that 91 households become MPI poor expenditure or income poor. However, this
and named the multidimensional urban poor. measure makes policymakers underestimated
Those MPI poor are deprived at least 22 urban poverty level and not subsidize timely.
percent of the weighted indicators. Therefore, On the contrary, MPI measure will make the
poverty head count H in MPI measure is policymakers look at poverty deeply at
16.40% by multidimensional poverty index in multidimensional level and give the subsidiary
five central cities in urban region. policy timely.

Figure 3. Poverty ratio by money-metric and MPI measure

Moreover, MPI measure reveals the MPI households in urban central cities have average
poor at many different aspects or indicators expenditure above the official poverty line in
(Figure 4). The first top five indicators affect comparison to those poverty lines issued by
mostly to MPI poor including type of dwelling Department of Labor, Invalids and Social
(25.22%), underemployment (21.94%), Affairs in five central cities, and up to 98.74%
housing space (16.52%), working time of the child 6 – 15 years old are attending
(14.63%), and adult illiteracy (5.67%). Besides school. It may have significant effects to
the bottom five indicators affect less to MPI poverty alleviation in central city. The more
poor including average expenditure (0.25%), children are attending school the more
cooking and drinking water (1.01%), under- opportunities they have to get the good job in
schooling 6 – 15 (1.26%), sanitation (1.51%), future and support their family to reduce
and years of schooling (1.89%). Especially the poverty. However, the child 6 – 15 years old in
observed households in urban central cities are urban central cities remains 1.26% that is not
not the electricity grid poor. Moreover, the attending school.
figures also show that 99.75% of the
 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015 19

Figure 4. Percentage of deprivation by indicator in urban central cities

The result of GSO also show that the 5.4. Comparison of urban poverty ratio
poverty rate in urban and rural region reduced in five central cities by MPI measure
year by year, from 35.60% in 2002 to 18.70% The comparison of urban poverty ratio in
in 2008 in rural region. In particularly, poverty five central cities shows that the
rate in urban region in entire country is so low multidimensional poverty level is significantly
and decreased from 6.60% in 2002 to 3.30% in high and different from five urban central
2008 (Figure5). cities. Figures in Table 2 show that Ho Chi
Minh and Can Tho City are two of the cities
% having the highest urban MPI poor with
22.50% and 21.43% respectively. Those MPI
poor suffer from average deprivation intensity
27.37% of indicators in Ho Chi Minh and
26.35% of indicators in Can Tho. On the
contrary, the MPI poor is at the lowest level in
Hai Phong City. However, the MPI poor in
Hai Phong suffer from average deprivation
Figure 5. General poverty rate by intensity at the highest level with 28.19%.
urban and rural region Table 2. The Head count H, average
The analytic results by MPI measure, intensity of MPI poverty
money-metric measure, and GSO from City H (%) A (%) MPI (%)
VHLSS 2008 give differently urban poverty Ha Noi 10.32 24.69 2.55
rates with 16.40%, 0.36%, and 3.3%
respectively. The GSO’s result of the general Hai Phong 8.33 28.19 2.35
poverty rate for entire country in urban region Da Nang 11.49 26.76 3.08
is still lower than multidimensional poverty
Ho Chi Minh 22.50 27.37 6.16
rate. Normally, the urban poverty rate in other
regions outside of urban central cities is higher Can Tho 21.43 26.35 5.65
than central city. The MPI result in this study Findings also show that
would make researchers and policymakers multidimensional poor households in urban Ha
having to look back the previous result and Noi, Hai Phong, Da Nang, Ho Chi Minh, and
think about poverty in Viet Nam under Can Tho City deprived in many different
multidimensional level. indicators. The five indicators significantly
20 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015

affecting to MPI poor households in Ha Noi indicators affect less to MPI poor including
City are underemployment, housing space, average expenditure, cooking and drinking
working time, type of dwelling, and chronic water, under schooling 6 – 15, sanitation, and
sickness respective to 40.80%, 21.60%, years of schooling. Especially the survey
19.20%, 6.40%, and 4.00%. households in urban central cities are not
The five indicators significantly electricity grid poor.
affecting to MPI poor households in Hai Secondly, Ho Chi Minh and Can Tho
Phong City are type of dwelling, housing City have the highest urban MPI poor with
space, underemployment, working time, 22.50% and 21.43% respectively. Those MPI
chronic sickness are respective to 23.75%, poor suffer from average deprivation intensity
21.25%, 18.75%, 18.75%, 5.00%. 27.37% of indicators in Ho Chi Minh and
The five indicators significantly 26.35% of indicators in Can Tho. The MPI
affecting to MPI poor households in Da Nang poor are lowest level in Hai Phong City
City are type of dwelling, working time, (8.30%) and those MPI poor suffer from
housing space, underemployment, chronic average deprivation intensity at the highest
sickness or adult illiteracy are respective to level (28.19%).
36.96%, 16.67%, 13.04%, 9.42%, 5.80%. Finally, the poverty rate estimated by
The five indicators significantly multidimensional level in urban central cities
affecting to MPI poor households in Ho Chi is significantly higher than the GSO’s result in
Minh City are underemployment, type of entire urban region in Vietnam. In particular,
dwelling, housing space, working time, adult there are the big gap in poverty ratio between
illiteracy are respective to 24.10%, 23.82%, each city by MPI result and GSO result.
17.17%, 13.57%, 7.76%. Moreover, the MPI poor suffer from
The five indicators significantly deprivation of many indicators at the same
affecting to MPI poor households in Can Tho time and the level of deprivation is quite
City are type of dwelling, sanitation, different from each indicator as type of
underemployment, housing space, drinking dwelling (22.25%), electricity (0.00%).
and cooking water are respective to 40.45%, 6.2. Policy implications
10.11%, 8.99%, 7.87%, 7.87%. In Viet Nam, many studies and
The four indicators affecting policymakers mostly concerned the economic
significantly to MPI poor households in five aspect of poverty. However, the poverty line
central cities in urban region are does not really provide adequate meanings to
underemployment, type of dwelling, housing maintain a basic life of household, especially
space, and working time. in the modern life nowadays. Thus, poverty
6. Conclusion and policy implication and quality of life require an assessment at
6.1. Conclusion multidimensional level.
The study has examined the poor The analysis of MPI based on sub
households in five urban central cities sample (n = 555) from VHLSS 2008 in five
including Ha Noi, Hai Phong, Da Nang, Ho urban central cities indicate some important
Chi Minh, and Can Tho City in Vietnam at the policy implications in order to reduce poverty.
multidimensional level by five dimensions and The findings show that MPI poverty rates are
fifteen indicators. The following main at high level in urban central cities. Indicators
conclusions come from the MPI analysis. affecting mostly to MPI poor are type of
Firstly, the poverty rate from MPI dwelling, underemployment, housing space,
measure is significantly higher than money- education, sanitation, drinking and cooking
metric measure. In particular, the top four water, and working time. The new findings
indicators affect mostly to the MPI poor in assist the policymaker looked fully back
urban central cities including type of dwelling, poverty in urban central cities at
underemployment, housing space, and multidimensional level. The following
working time. Besides the bottom five recommendations are drawn from the findings:
 Ho Chi Minh City Open University Journal of Science–No.5(1) 2015–June/2015 21

Firstly, type of dwelling has significant at sanitation at the major priority to increase
effect to MPI poor in five urban central cities. the quality of life and give the suitable
In particular, Can Tho City had 40.45% of solutions. It can be done via low-interest loan
households using the semi-permanent and to the poor households to build toilet or
temporary house. The policymakers should organizing the volunteer campaign team to
find the appropriate way to subsidy to those canvass the rich households supporting to the
poor households in order to improve type of poor.
dwelling and support those households having Fourthly, the resource of drinking and
the permanent houses. For instance, the cooking water has the important effect to
government might think to let the poor human being health. In the MPI result,
households accessing to low-interest loan, majority of survey households receive the
depending on each specific situation. clean water. However, Can Tho City remained
Secondly, quality of life of households many households using rain-water and river
will improve significantly through income. water. These households need the subsidy
However, the MPI result showed that timely from government agencies because of
underemployment is so high in urban central not only improving living standard but also
cities causing an increase of the poor preventing sickness for them.
households in these cities. The following Finally, one of the important strategies to
solutions should be reviewed by policymakers alleviate poverty is improvement of the
in central city (1) set up the employment educational system at all levels and assistance
introduction meeting and invite the workers, of households escaping poverty by increasing
companies that share conditions to employ the educational level. In facts, the MPI analysis
workers; (2) usually train the labor skill for discovered that the under-schooling of child 6
workers with free fee in industrial zones in – 15 years old in Can Tho and Ho Chi Minh
order to attract the corporate; (3) establish the City also have high rates with 4.76% and
practical exercise for student; (4) take more 2.92% respectively, and higher than those of
investigation why the survey households in other central cities. This could be a big barrier
urban cities having high underemployment in the economic development of those
rate and allocate the subsidy timely and households in Can Tho and Ho Chi Minh City.
effectively. The government agencies in Can Tho and Ho
Thirdly, another of new finding in MPI Chi Minh City should pay more attention in
analysis that many observed households in educational indicator in urban areas. The
Can Tho using the toilet directly over the feasible solutions are to check what the real
water. The bad sanitation will make the reason that make educational poverty rate is
disease easily to outbreak and shed the disease high in survey areas and then allocate
from regions to regions. Therefore, resources more effective.
government agencies in Can Tho should look

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