The impact of minimum wages on employment in a low income country : an evaluation using the difference-differences approach

Unlike the well-developed literature on the employment impact of the minimum wage in industrial nations, very little is known about minimum wage effects in low income countries. Minimum wages increased sharply in Indonesia between 1990 and 1996 and by more in some provinces than in others. Following Card and Krueger (1994) the authors exploit the large geographic variation in the rate of increase and compare changes in employment in the clothing, textile, footwear, and leather industries on either side of the Jakarta-West Java border. They use household level labor market data to establish compliance with the legislation. They obtain matched difference-in-difference estimates of the employment impact using a census of all large and medium-size firms in the clothing, textile, leather, and footwear industries. The authors find some evidence of a negative employment impact for small, domestic firms but no employment impact for large firms, foreign or domestic.Environmental Economics&Policies,Banks&Banking Reform,Public Health Promotion,Labor Policies,Municipal Financial Management,Environmental Economics&Policies,Banks&Banking Reform,Child Labor,Municipal Financial Management,Health Monitoring&Evaluation

Voice lessons : local government organizations, social organizations, and the quality of local governance

As part the Local Level Institutions study of local life in villages in rural Indonesia information was gathered on sampled household's participation in social activities. We classified the reported activities into four distinct types of social activity: sociability, networks, social organizations, and village government organizations. Respondents were also asked about questions about their village government: whether they were informed about village funds and projects, if they participated in village decisions, if they expressed voice about village problems, and if they thought the village government was responsive to local problems. Several findings emerge regarding the relationship between the social variables and the governance activities. Not surprisingly, an individual household's involvement with the village government organizations tends to increase their own reports of positive voice, participation, and information. In contrast, the data suggest a negative spillover on other households. There is a strong"chilling"effect of one household's participation in village government organizations on the voice, participation, and information of other households in the same village. The net effect of engagement in village government organizations is generally negative, while the net effect of membership in social organizations is more often associated with good governance outcomes. These findings indicate that existing social organizations have a potentially important role to play in enhancing the performance of government institutions in Indonesia and in the evolution of good governance more generally.Health Economics&Finance,Decentralization,Community Development and Empowerment,Housing&Human Habitats,Public Health Promotion,National Governance,Governance Indicators,Housing&Human Habitats,Community Development and Empowerment,Educational Sciences

Gender and Corruption: Insights from an Experimental Analysis

In recent years, a substantial body of work has emerged in the social sciences exploring differences in the behavior of men and women in various contexts. This paper contributes to this literature by investigating gender differences in attitudes towards corruption. It departs from the previous literature on gender and corruption by using experimental methodology. Attitudes towards corruption play a critical role in the persistence of corruption. Based on experimental data collected in Australia (Melbourne), India (Delhi), Indonesia (Jakarta) and Singapore, we show that while women in Australia are less tolerant of corruption than men in Australia, there are no significant gender differences in attitudes towards corruption in India, Indonesia and Singapore. Hence, our findings suggest that the gender differences found in the previous studies may not be nearly as universal as stated and may be more culture-specific. We also explore behavioral differences by gender across countries and find that there are larger variations in women’s attitudes towards corruption than in men’s across the countries in our sample.Gender, Corruption, Experiments, Punishment, Multicultural Analysis

Subject Pool Effects in a Corruption Experiment: A Comparison of Indonesian Public Servants and Indonesian Students

We report results from a corruption experiment with Indonesian public servants and Indonesian students. Our results suggest that although both subject pools show a high level of concern with the extent of corruption in Indonesia, the Indonesian public servant subjects have a significantly lower tolerance of corruption than the Indonesian students. We find no evidence that this is due to a selection effect. The reasons given by the public servants for either engaging in or not engaging in corruption suggest that the differences in behavior across the subject pools are driven by their different real life experiences. For example, when abstaining from corruption public servants more often cite the need to reduce the social costs of corruption as a reason for their actions, and when engaging in corruption they cite low government salaries or a belief that corruption is a necessary evil in the current environment. In contrast, students give more simplistic moral reasons. We conclude by arguing that experiments such as the one considered in this paper can be used to measure forward-looking attitudinal change in society and that results obtained from different subject pools can complement each other in the determination of such attitudinal changes.Corruption, Experiments, Subject Pool Effects

When Celebrities Speak: A Nationwide Twitter Experiment Promoting Vaccination in Indonesia

Celebrity endorsements are often sought to influence public opinion. We ask whether celebrity endorsement per se has an effect beyond the fact that their statements are seen by many, and whether on net their statements actually lead people to change their beliefs. To do so, we conducted a nationwide Twitter experiment in Indonesia with 46 high-profile celebrities and organizations, with a total of 7.8 million followers, who agreed to let us randomly tweet or retweet content promoting immunization from their accounts. Our design exploits the structure of what information is passed on along a retweet chain on Twitter to parse reach versus endorsement effects. Endorsements matter: tweets that users can identify as being originated by a celebrity are far more likely to be liked or retweeted by users than similar tweets seen by the same users but without the celebrities' imprimatur. By contrast, explicitly citing sources in the tweets actually reduces diffusion. By randomizing which celebrities tweeted when, we find suggestive evidence that overall exposure to the campaign may influence beliefs about vaccination and knowledge of immunization-seeking behavior by one's network. Taken together, the findings suggest an important role for celebrity endorsement.Comment: 55 pages, 13 tables, 6 figure

Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia

We use unique data from over 600 Indonesian communities on what individuals know about the poverty status of others to study how network structure influences information aggregation. We develop a model of semi-Bayesian learning on networks, which we structurally estimate using within-village data. The model generates qualitative predictions about how cross-village patterns of learning relate to network structure, which we show are borne out in the data. We apply our findings to a community-based targeting program, where citizens chose households to receive aid, and show that the networks that the model predicts to be more diffusive differentially benefit from community targeting

Self-Targeting: Evidence from a Field Experiment in Indonesia

This paper shows that adding a small application cost to a transfer program can substantially improve targeting through self-selection. Our village-level experiment in Indonesia finds that requiring beneficiaries to apply for benefits results in substantially poorer beneficiaries than automatic enrollment using the same asset test. Marginally increasing application costs on an experimental basis does not further improve targeting. Estimating a model of the application decision implies that the results are largely driven by the nonpoor, who make up the bulk of the population, forecasting that they are unlikely to pass the asset test and therefore not bothering to apply.World BankAustralian Agency for International DevelopmentInternational Initiative for Impact Evaluatio

Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia

We use a unique data-set from Indonesia on what individuals know about the income distribution in their village to test theories such as Jackson and Rogers (2007) that link information aggregation in networks to the structure of the network. The observed patterns are consistent with a basic diffusion model: more central individuals are better informed, and individuals are able to better evaluate the poverty status of those to whom they are more socially proximate. To understand what the theory predicts for cross-village patterns, we estimate a simple diffusion model using within-village variation, simulate network-level diffusion under this model for the over 600 different networks in our data, and use this simulated data to gauge what the simple diffusion model predicts for the cross-village relationship between information diffusion and network characteristics (e.g. clustering, density). The coefficients in these simulated regressions are generally consistent with relationships suggested in previous theoretical work, even though in our setting formal analytical predictions have not been derived. We then show that the qualitative predictions from the simulated model largely match the actual data in the sense that we obtain similar results both when the dependent variable is an empirical measure of the accuracy of a village’s aggregate information and when it is the simulation outcome. Finally, we consider a real-world application to community based targeting, where villagers chose which households should receive an anti-poverty program, and show that networks with better diffusive properties (as predicted by our model) differentially benefit from community based targeting policies

Targeting the Poor: Evidence from a Field Experiment in Indonesia

In developing countries, identifying the poor for redistribution or social insurance is challenging because the government lacks information about people’s incomes. This paper reports the results of a field experiment conducted in 640 Indonesian villages that investigated two main approaches to solving this problem: proxy-means tests, where a census of hard-to-hide assets is used to predict consumption, and community-based targeting, where villagers rank everyone on a scale from richest to poorest. When poverty is defined using per-capita expenditure and the common PPP$2 per day threshold, we find that community-based targeting performs worse in identifying the poor than proxy-means tests, particularly near the threshold. This worse performance does not appear to be due to elite capture. Instead, communities appear to be using a different concept of poverty: the results of community-based methods are more correlated with how individual community members rank each other and with villagers’ self-assessments of their own status than per-capita expenditure. Consistent with this, the community-based methods result in higher satisfaction with beneficiary lists and the targeting process.