This paper uses the Vietnam ese Households Living Standards Survey s of 2002, 2004, 2006 and 2008 to examine the effect s of nonfarm activity on poverty in rural Vietnam. We show that nonfarm activity helps the poor, but not the poorest , given that households need to own a minimum level of endowment to partake in nonfarm a ctivity. We find an inverted - U shaped relationship between households ’ endowment levels and the probability of participating in nonfarm activity. Also, in contrast to previous studies which largely by - passed the endogeneity of nonfarm activity , we instrume nt it with nonfarm networks , and find that nonfarm activity plays an important role in poverty reduction , however, this impact decreases over time.