Household Dynamics, Chronic Poverty and Social Protection in Indonesia

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Household Dynamics, Chronic Poverty and Social
Protection in Indonesia

• Wenefrida Widyanti, Asep Suryahadi,
• Sudarno Sumarto and Athia Yumna
• The SMERU Research Institute
• www.smeru.or.id

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Outline

• Introduction
• Data
• Poverty and Chronic Poverty in Indonesia
• Household Composition Change and Chronic Poverty
• Household Dynamics as a Protection Instrument
• Economic Viability and Chronic Poverty
• Household Dynamics and the Concept of Chronic
  Poverty
• Household Dynamics and Social Protection
• Conclusion

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Introduction

• A typical household usually consists of several
  individuals with different characteristics,
  including their economic capacities, which in the
  end determines the economic capacity of the
  household as a unit.
• A change in household composition will affect the
  economic capacity and economic condition of a
  household and most likely entail simultaneously
  both positive and negative effects on a
  households economic capacity and economic
  condition.
• The direction of causation can also go in the
  opposite direction. A change in the economic
  condition of a household can induce the household
  to change its household composition.
• The existence of relationships between household
  composition and households economic capacity and
  condition indicates that household composition
  may play an important role in explaining why some
  households fall into chronic poverty (i.e. severe
  and persistent poverty).

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Data

• Indonesia Family Life Survey (IFLS) Data from
  RAND, a longitudinal household survey with a
  sample which is representative of about 83
  percent of the Indonesian population (13
  provinces in Indonesia)
• IFLS1 was conducted in 1993/94 by RAND in
  collaboration with the Demographic Institute of
  the University of Indonesia (LDUI) ? 7,224
  households (over 22,000 individuals) were
  interviewed.
• IFLS2 was subsequently conducted in 1997 by RAND
  in collaboration with UCLA and LDUI ? 94 of
  IFLS1 households were relocated and
  re-interviewed 878 split-off households (over
  33,000 individuals) were interviewed.
• IFLS3 was fielded in 2000, conducted by RAND in
  collaboration with the Centre for Population and
  Policy Studies, Gadjah Mada University (PSKK-UGM)
  ? 10,400 households (around 39,000 individuals)
  were interviewed.
• A complete panel of 6,403 households were
  interviewed in IFLS1, IFLS2 and IFLS3.

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Poverty and Chronic Poverty in Indonesia (1)

• There was clear improvement in the household
  welfare between 1993 and 1997 however, due to
  the advent of an economic crisis starting in the
  second half of 1997, there was stagnation in
  household welfare between 1997 and 2000.

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Poverty and Chronic Poverty in Indonesia (2)

• Always poor twice poor ? chronic poor (14.1)
• Once poor ? vulnerable (20.2)
• Never poor ? non-poor (65.7)

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Household Composition Change and Chronic Poverty
(1)

• The distributions by poverty groups of both
  households that experienced household composition
  change and those that did not are similar to each
  other as well as to the total distribution ?
  Household composition change is not a major cause
  of the chronic poverty phenomenon in Indonesia

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Household Composition Change and Chronic Poverty
(2)

• The distributions by poverty groups of the
  households which experienced household
  composition change by the type of the composition
  change that occurred are similar to the total
  distribution (except divorce or separation but
  based on a small number of observations) ? There
  is no evidence that certain types of household
  composition change cause a higher probability for
  households to be chronically poor

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Household Dynamics as a Protection Instrument

• The proportion of bad state households among
  those that experienced a change in household
  composition is similar to the total households ?
  There is no evidence that households change their
  composition to cope with poverty and
  unemployment.

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Economic Viability and Chronic Poverty

• Single female without children households have
  the lowest probability to be either chronically
  poor or vulnerable, while single father
  households have the highest probability to be
  vulnerable.
• The larger the number of household members, the
  higher the probability a household to be
  chronically poor or vulnerable.
• Higher proportion of household members with
  senior secondary or higher education reduces the
  probability of a household to be either chronic
  poor or vulnerable.

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Household Dynamics and the Concept of Chronic
Poverty

• The complete panel households are poorer than the
  total sample in each round
• The households dropped out of sample are less
  poor
• The new households added into sample are less
  poor
• ? The use of household as the unit of analysis
  for poverty may undermine the conceptualisation
  measurement of chronic poverty.

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Household Dynamics and Social Protection

• Poverty status in general does not increase the
  probability of receiving assistance, except for
  the vulnerable in receiving basic need
  assistance.
• Change in household composition does not increase
  the probability of receiving assistance either.

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Conclusion (1)

• Household composition change is not a major cause
  of the chronic poverty phenomenon in Indonesia.
• There is no evidence that certain types of
  household composition change cause a higher
  probability for households to be chronically
  poor.
• There is no evidence that households change their
  composition to cope with poverty as well as
  unemployment.
• Husband-wife households have the highest
  probability to be non-poor, while single mother
  households have a higher probability to be
  non-poor than single father households.

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Conclusion (2)

• The larger the number of household members, the
  higher the probability a household to be
  chronically poor or vulnerable.
• A higher proportion of household members with
  senior secondary or higher education reduces the
  probability of a household to be either chronic
  poor or vulnerable.
• Because of household dynamics, the use of
  household as the unit of analysis for poverty
  could undermine the conceptualisation
  measurement of chronic poverty.
• Poverty status and change in household
  composition in general do not increase the
  probability of a household to receive an
  assistance.

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Thank you