The New Economics of Labor Migration (NELM) hypothesizes that migration is a strategy to
reduce risks and financial liquidity constraints of rural households. This paper tests this hypothesis
for the case of Vietnam. The impacts of migration on agricultural production and diversification are
estimated in fixed effects regression models based on a panel data set of about 2,000 households in
Vietnam. The findings suggest that rural households who receive remittances from their migrants
reduce the share of their income from rice, increase their land productivity and become more
specialized in labor allocation. However, migration also decreases labor productivity and crop
diversification of rural households. Overall, the NELM hypothesis is only supported in cases
migrant households receive remittances.