The Merits of Ability in Developing and Developed Countries

Different economic characteristics between developing and developed countries may require worker with different skills, resulting in different returns to the same ability. Moreover, it is also possible that different countries require different skills depending on their economic fundamentals. This paper provides evidence of the hypotheses above by comparing the labour market returns to numeracy and cognitive ability in Indonesia and the United States. In Indonesia, I find that numeracy has no significant effect on income, while general cognitive ability positively affects income. In the United States, meanwhile, I find that only mathematics ability is significant. Looking at the returns by sex, I find that the benefits of higher cognitive skills only pertain to males in Indonesia, while females have higher returns to numeracy than males in the United States. These results are robust to different specifications. Overall, these differences in returns to ability between Indonesia and the United States indicate that different economic structures indeed demand different sets of skills.income, ability, mathematics, cognitive, Indonesia, United States

Labor Market Returns, Marriage Opportunities, or the Education System? Explaining Gender Differences in Numeracy in Indonesia

This paper measures the evolution of the gender differences in numeracy among school age children using a longitudinal dataset from Indonesia. A unique feature of the dataset is that it uses an identical test for two survey rounds, which implies that any changes in the gender gap are caused by actual changes in numeracy. To my knowledge, this is the first study that is able to distinguish actual changes in numeracy from changes in the difficulty of the tests. I find that girls outperform boys by 0.09 standard deviations when the sample was around 11 years old. Seven years later, the gap has increased to 0.19 standard deviations. This gap is equivalent to around 18 months of schooling. I find evidence for two explanations for the widening gap. The first is that households invest more resources in girls relative to boys. This behavior appears to be rational, driven by the higher labor market returns to numeracy for girls than for boys. In contrast, I find no marriage market returns to numeracy for either gender. The second explanation is that the Indonesian education system appears to play some role in promoting the gender gap. A particular source of this appears to be the teachers, as the gender gap in numeracy only occurs in schools where more than half of the teachers are female.numeracy, gender gap, education, Indonesia

The value of vocational education : high school type and labor market outcomes in Indonesia

This paper examines the relationship between the type of senior high school attended by Indonesian youth and their subsequent labor market outcomes. This topic is very timely, given the government’s recent decision to dramatically expand vocational enrollment. The analysis controls for an unusually rich set of predetermined characteristics, and exploits longitudinal data spanning 14 years to separately identify cohort and age effects. There are four main findings. First, students are sorted into different school types largely on the basis of their entering exam score. Public schools attract the highest-scoring students, while private vocational schools serve the lowest-scoring students. Second, after controlling for a variety of characteristics, including test scores, male public school graduates earn a substantial premium over their privately schooled counterparts. Third, private vocational school graduates fare at least as well as private general graduates, despite coming from more disadvantaged socioeconomic backgrounds. Finally, the returns to public vocational education have declined sharply for the most recent cohort of men. This raises important concerns about the current expansion of public vocational education, and the relevance of the male vocational curriculum in an increasingly service-oriented economy.Tertiary Education,Secondary Education,Education For All,Labor Markets,Teaching and Learning

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.chronic poverty, intergenerational mobility, children, welfare, Indonesia

Objective Measures of Family Welfare for Individual Targeting : Results from Pilot Project on Community Based Monitoring System in Indonesia

This report documents the results of a pilot project on a new poverty monitoring system that improves the current system in three areas. First, it involves the locals in monitoring poverty in their own area. Second, the poverty indicators are sensitive to local conditions, accurate, and cannot be easily tampered. Third, the results are expeditious, with only five months needed between the start of data collection to final publication. Given Indonesia's geographical size and the decentralization that puts more power at the hands of the district governments in determining poverty alleviation programs, we believe that this monitoring system is the most suitable for Indonesia.poverty, poverty monitoring system, Indonesia

A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia

This study provides an overview of inequality in Indonesia for the period of 1984 to 2002 using several widely used measurements of inequality. Firstly, unlike previous studies, our paper uses real consumption expenditure that takes into account the high regional price disparity across regions in Indonesia. Secondly, we found that, although during the crisis all measures indicate a decrease in inequality, it actually increased for those below the poverty line. Finally, this study also provides an estimation of distribution corrected growth elasticity of poverty for Indonesia. This proves to be an important explanation for the fact that the poverty rate decreased very rapidly between 1999 and 2002 : because inequality during the peak of the economic crisis in 1999 was at its lowest level in 15 years.Inequality, real consumption expenditure, regional price disparity, growth elasticity of poverty, economic crisis, Indonesia

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 BPSs 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 ILOs 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.discouraged workers, open unemployment, measurement, Indonesia