The Contrasting Role of Ability and Poverty on Education Attainment: Evidence From Indonesia

Abstract

This study measures the relative role of poverty and scholastic ability on education attainment in developing countries, where a substantial portion of the population still live in poverty and poor people are markedly credit constrained. different from most studies in developing countries, this paper uses a multiple-wave and long-spanning panel dataset that follows a cohort of children beginning from primary school until they are well over schooling age. we find that poverty has a statistically-significant and negative effect on junior high attainment, while it has a negligible effect on senior high completion. in contrast, scholastic ability plays no role in ensuring junior high completion but is crucial in increasing a child\u27s chance to graduate from senior high school. in addition, we find that high- and low-ability poor children have a similarly low chance of finishing junior high school. based on our findings, we formulate several policy recommendations to increase education attainment. keywords: poverty, scholastic ability, education, Indonesia jel classifications: i21, 01