The Impact of Public Governance on Household Income: A Quantile Panel Analysis

This study investigated the role of provincial governance on the growth of per capita income of Vietnamese households, using a balanced panel dataset for the period 2012-2014. Whereas we found no evidence for the influence of provincial governance when a linear fixed-effect regression estimator was used, the results from a fixed-effect quantile regression estimator reveal that provincial governance has a positive effect on several groups (but not the poorest) and the effect tends to be greater for better-off households. In addition, we find that wage employment plays a larger role in the income growth of poorer households, while returns on education are higher for richer households. The findings suggest that a mean regression approach that looks only at the role of explanatory variables on mean household welfare and does not consider differences in the distribution of household welfare, may miss some heterogeneity that is of interest to policy makers