This paper examines the efficiency and welfare impact of landholdings in rural Vietnam. We utilize panel data set from field surveys which have been carried out from 1997 to 2007 in Red River Delta and Mekong Delta. We find no support for the hypothesis that small farmers in the north survey area have an advantage of efficiency in rice production. Since, although we confirm the inverse relationship between the land productivity and farm size, the average costs have increased rapidly as farm size have decreased. Some farmers, however, in the South have gradually cumulated in a middle-class of landholdings that has achieved the highest productivity, which implies efficient land allocation is realized. We also clarify the welfare impacts of these landholdings on sample households. In North, the declining farm size is driven by non-market transaction and inevitable. Then, small land endowments cause the diversification of income sources from agriculture to livestock and non-agriculture even if fermers realize high land productivity. In the South, estimation result shows positive relationship between total income and farm size while there is heterogeneity of welfare impact on households who sell their land.


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