The Impact of Private Sector Growth on Poverty Reduction: Evidence From Indonesia

This paper assesses the effect of public and private sector growth on poverty in Indonesia. we use fixed capital formation growth as the proxy for the private sector and growth in government spending as the indicator of the public sector. we find that growth in both sectors significantly reduces poverty; moreover, they have the same elasticity. therefore, growth in both public and private sector spending will reduce poverty twice as fast as just relying on public spending. the implication is that it is crucial for governments to improve the business climate in their countries so that the private sector will be able to flourish and in the end expedite poverty reduction. keywords: private sector; investment; government expenditure; poverty reduction; Indonesia jel classification: h50, i32, o4

Reducing Unemployment in Indonesia: Results From a Growth-employment Elasticity Model

Most of the unemployed in Indonesia are young and inexperienced, still live with their parents, and have at least 12 years of education. starting with the premise that efforts to reduce unemployment should take into account the characteristics of the unemployed, we develop a model to look at the impact of different sectors and locations of economic growth on urban, rural, and national employment using a provincial level panel dataset. we find that increasing employment in rural and urban areas indeed requires different strategies. services growth has the highest elasticity of employment in urban areas, while agriculture growth is still the best avenue to increase rural employment. keywords: unemployment; growth elasticity; profile; Indonesia. jel classification: j21, j23

Causes of Low Secondary School Enrollment in Indonesia

In this study we investigate the causes of low secondary school enrollment in Indonesia despite near universal primary school attendance. we then find that attrition during the transition between primary and junior secondary education levels is the main cause. we investigate the causes of attrition using a longitudinal household survey dataset. firstly, household welfare level is a significant determinant of the low enrollment. secondly, children from muslim families have a significantly lower probability of continuing to the secondary level. thirdly, children in areas with relatively abundant employment opportunities have a higher probability of giving up schooling. fourthly, girls have a significantly lower chance of continuing. the policy implications of our results point to, among other things, the need for refocusing government education spending and scholarship programs to target those who go missing from the education system after completing primary education. keywords: education, determinants, secondary school, enrollment, Indonesia. jel classification: i21, i28, j16, z12

The Measurement and Trends of Unemployment in Indonesia: the Issue of Discouraged Workers

This study provides an overview of the concepts used to measure unemployment in Indonesia and their consequences for the measured unemployment trends. one finding shows that bps's decision in 2001 to relax the definition of labor force by including discouraged workers has resulted in an artificially high open unemployment rate and disguises the actual decline in traditionally-measured open unemployment rates post-crisis. another finding indicates that discouraged workers in Indonesia are not confined only to the poor and those who are denied access to the proper job market. we recommend that, if Indonesia still wants to utilize a broader definition of the labor force, the measurement of open unemployment should adhere to the ilo's recommendation of only including those discouraged workers who are still willing to work. the discouraged workers who are unwilling to work should be left in the “out of labor force” category. keywords: discouraged workers; open unemployment; measurement; Indonesia

Economic Growth and Poverty Reduction in Indonesia:the Effects of Location and Sectoral Components of Growth

This study extends the literature on the relationship between economic growth and poverty reduction by differentiating growth and poverty into their sectoral compositions and locations. we find that growth in the rural services sector reduces poverty in all sectors and locations. however, in terms of elasticity of poverty, urban services growth has the largest for all sectors except urban agriculture. we also find that rural agriculture growth strongly reduces poverty in the rural agriculture sector, the largest contributor to poverty in Indonesia. this implies that the most effective way to accelerate poverty reduction is by focusing on rural agriculture and urban services growth. in the long run, however, the focus should be shifted to achieving robust overall growth in the services sector. keywords: economic growth, poverty, urban, rural, Indonesia. jel classifications: i32, o18, o49

The Effects of Parental Death and Chronic Poverty on Children\u27s Education and Health: Evidence From Indonesia

Using a sufficiently long-spanning longitudinal dataset, we estimate the short and long term effects of maternal and paternal death on children\u27s school enrollment, educational attainment, and health in Indonesia, then compare them to the effect of chronic poverty. we also investigate whether there are any gender dimensions in the effects. we find that young maternal orphans have worse educational outcomes than non-orphans, with the effect getting worse over time. however, we find no significant effect of orphanhood on health. however, chronically poor children have worse health and education outcomes. among young children, the effect of maternal orphanhood on education is significantly more adverse than that of chronic poverty. finally, chronically poor orphans do not suffer adverse effects beyond the effects of chronic poverty. keywords: orphanhood, chronic poverty, education, health, children, Indonesia jel classification: i10, i21, i3

The Consequences of Child Market Work on the Growth of Human Capital

Child labor is a phenomenon that has attracted a great amount of attention and research. theoretical propositions suggest that child labor is inefficient if it adversely affects future potential earning ability. this paper contributes to the literature on the effects of child market work on human capital by focusing on the long-term growth in human capital, which is widely known to significantly affect earning ability. the paper also uses better measures of human capital by focusing on the output of the human capital production function: numeracy skills, cognitive skills, and pulmonary function. using a rich longitudinal dataset on Indonesia, we find strong negative effects of child labor on the growth of both numeracy and cognitive skills in the next seven years. in addition, we find a strong and negative effect on pulmonary function as measured through lung capacity. comparing the effects by gender and type of work, we find that female child workers suffer from more adverse effects on their mathematical skills growth, while male child workers experience a much smaller growth in their pulmonary function. we also find that child workers who work for a wage outside the family bear worse effects compared to child workers who work in the family business. keywords: child labor, human capital, skills, health, Indonesia jel classifications: i12, i21, j13, j22, o1

Predicting Consumption Poverty Using Non-consumption Indicators: Experiments Using Indonesian Data

Although consumption expenditure data is crucial for assessing the level of people's welfare and calculating important welfare measures such as the poverty headcount rate, collecting such data requires significant time and effort. in this study, we experiment with three approaches to predict consumption expenditure and poverty at household and aggregate level as simpler alternatives to using consumption expenditure. the idea is not to use these alternatives as a substitute for consumption expenditure data, rather to use it for the purposes of rapid monitoring and appraisal of welfare. the three approaches are i) consumption correlates model, ii) poverty probability model, and iii) the wealth index principal components analysis (pca). we test each approach's performance and found that the consumption correlates model is the best approach to predict poverty quickly and relatively accurately. we found that education level, asset ownership, and consumption pattern are the best predictors of expenditure and poverty. keywords: consumption, poverty, predictor, data, Indonesia

Destined for Destitution: Intergenerational Poverty Persistence in Indonesia

We estimate intergenerational poverty persistence in Indonesia using a panel dataset. to the best of our knowledge, this is the first such study looking at the issue in the Indonesian context. different from the majority of studies on this issue, we include controls for several household and individual characteristics, including for living arrangements. moreover, to circumvent data issues that plague earnings data in developing countries, we use chronic poverty status as a long-term parental welfare measure. we find there is a substantial intergenerational mobility away from poverty among children from poor households. however, the risk of continuing to live in poverty as adults is 35 percentage points higher for children from chronically poor households than for children from households which are not chronically poor. keywords: chronic poverty, intergenerational mobility, children, welfare, Indonesia jel classifications: i32, j6