WoPEDS | Working Papers

This study investigates how cognitive abilities correlate with civic engagement of older Europeans (aged 50+), using waves two and three of the SHARE dataset. An instrumental variable approach is employed in an at-tempt to disentangle possible endogeneity issues arising between cognitive abilities and civic engagement. Cognitive abilities are instrumented with the number of books in the respondent’s place of residence during childhood. The results advocate for the existence of a causal relationship running from cognition in old age to community engagement. Though contradicting standard theoretical predictions, this empirical finding is in line with mainline experimental results showing how participants with higher cognitive abilities tend to be less risk averse, and thus more willing to opt for a payoff-dominant action in a stag hunt game context more often. DOWNLOAD

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Volatility of Indonesia Rupiah and Jakarta Composite Index remain one of main issues in Indonesia economy after 1997 Asian crisis. The objectives of this research are (1) determining the volatility of Indonesia Rupiah to US Dollar exchange rates and Jakarta Composite Index (JCI) and (2) analysing the dynamic volatility transmission between exchange rates and JCI. Exchange rate and JCI volatility were measured using GJR-GARCH approach. Estimated using VAR model, this study found that current volatility of exchange rate (ER) respond significantly to the change of volatility of Jakarta Composite Index (JCI) in the previous month. On the other hand, change in previous exchange rate volatility did not affect current JCI volatility. DOWNLOAD

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Public investment is a fundamental response of government to the existing imbalances between subnational regions. Especially, the question concerning the allocation policy of public investment more receives a great deal of public attentions along with the decentralization process, because economic growth is inevitably uneven in its subnational impacts and decentralization has effects on the change in the allocations across the subnational governments and regions. This study explores the public investment allocation policy that either emphasizes efficiency, equity, or redistribution or strives to strike a balance between these three policy directions under the trade-off restrictions. We employ a new benchmark index, “equity–growth allocation share,” defining regional public investment allocation, given equal public capital growth across regions. We apply this method to Indonesia’s and Japan’s pre- and post-decentralization eras, beset by efficiency–equity trade-offs between uneven regional development and balanced growth policy. We found two major observations that contrast between two countries. First, as excessive economic activity regions in two countries, the capital region in Japan mostly shows the highest returns on public capital where the Java-Bali region does not. Second, Indonesia shows a structural change investment concentration in the Java-Bali region before and after decartelization regime while the Japan’s government pursues the […]

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For the last 10 years, Indonesian economy suffers from a triple setback. First, it experiences a slowing-down in economic growth. Second, the rate of poverty reduction is also slowed down, and third, there has been no improvement in the inter-regional economic disparity. In 2011, Indonesian government set a new strategy by launching a master plan for the acceleration and expansion of economic development (MP3EI) in response to these challenges. The strategy divides Indonesia into 6 economic corridors with two aims: (1) to accelerate investment in each corridor focusing on sectors with high comparative advantage; (2) to accelerate infrastructure investment in each corridor. Using a multi-sectors and multi-regions computable general equilibrium model of the Indonesian economy, this paper evaluates the extent to which these strategies can reduce Indonesia’s inter-regional disparity. The result of the analysis suggests that the direction of the MP3EI strategy is in line with its mission to reduce regional disparity as it can accelerate the growth of regions outside Java and Sumatera, particularly eastern regions (Maluku and Papua). However, it can be made more progressive by broadening the sectoral base of the investment target. The current strategy relies on sectors with high comparative advantage particularly capital-intensive resource-based sectors. […]

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This paper investigates the role of information technology in its contribution toward the competitiveness of micro, small and medium enterprises. The data used in the analysis is based on a survey of micro, small and medium enterprises in Cimahi District, West Java Province, Indonesia. Variables to measure the degree of adoption of information technology, competitiveness, and other control latent variables are constructed by Factor Analysis using various relevant indicators. Path Analysis is also undertaken to investigate the effect of the adoption of information technology on competitiveness. It found that there is a lack of use of information technologies among the micro, small and medium enterprises surveyed. The information technologies are used for some purposes such as administration, marketing, production, and other activities related to the business. We also found the adoption of information technology has a positive contribution to competitiveness. DOWNLOAD

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Focusing on Indonesia, this study analyzes the relationship between inequality and the process of urbanization. Itperforms a panel data regression analysis to test the Kuznets inverted-U hypothesis for urbanization based on a provincial panel data set of 33 provinces over the period 2000-2009, constructed by using the core National Socio-economic Survey (core Susenas). Our results support the Kuznets inverted-U hypothesis, whether the Gini coefficient or the Theil indices are used as a measure of inequality. According to our estimates, expenditure inequality would reach the peak at an urbanization rate of around 46-50%. Since the 2010 urbanization rate is 50%, this indicates that expenditure inequality has already attained the peak value. Thus, further urbanization would decrease expenditure inequality, but all other things being equal. DOWNLOAD

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This paper look at the long-run evolution of various labor market indicators in Indonesia over the period of 1992 to 2012 using the National Socioeconomic Survey (SUSENAS) data to describe the development before and after the reform era. Four indicators are used in this study to measure the labor market performance, which are formality rate,working poor rate, not in employment and education rate and child labor rate. Those indicators are calculated by per capita expenditure quintile to capture the equity aspect of labor market development. In addition, we also analyze in more detail the labor market condition in urban andrural separately. We found that while in general there have been some improvement during the period,there is a widening gap in some of the indicators especially in the formality rate betweenthe poor and other income class over that particular period that need special attention. High increase in the minimum wages and more rigid labor regulation in the beginning of decentralization era and also economic crisis might explain part of the widening gap. Furthermore, there are also serious and persistence problem in the quality of jobs in Indonesia, where having a job is not ensuring people out of poverty. DOWNLOAD

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Indonesia significant progress in health outcomes is followed by significant issues, among them are the issues of inequities and inequalities. These two issues are known to be an important part in achieving plausible health outcome. This study attempts to observe disparity reduction and its acceleration rate in selected health indicators (i.e. access to improved water source and sanitation facility, first-child birth attended by health care worker) over a period of the last 15 years. We analyze the health indicators by clusters of expenditure quintile and regions (urban – rural, Java – non Java, KTI – non KTI). Our analyses have shown some key observations. First, the national figures show improvement for all indicators except for the percentage of population suffering from diarrhea (seemed worsening). However, the rate of improvement remained stagnant and there was no acceleration. Second, the gap reduction between the rich and the poor in terms of health access and status seemed to slow down or even widened during the post reformation era. Third, the health indicators movement trend by region did not seem to have a pattern and the gap between richer and poorer areas exist in some indicators and nonexistent in others (the widest gap is […]

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We use The National Socioeconomic Survey (SUSENAS) data from 1992 to 2012, to describe the condition of education development in Indonesia before and after the Reform Era. Historical data on education of Indonesia shows that this country has made a remarkable achievement in education development, which is indicated by a significant improvement on several education indicators. However, 1997-1998 Asian crisis is believed had slowed down the development of education sector in Indonesia. Three indicators areused in this study to measure the performance of education development, which are yearly schooling, net enrollment rate, and literacy rate. We found the gap of years of school between gender, region and income group is getting narrowed in the reform era. The net enrollment rate of all level of education also improved between 1992 and 2012. The gap between gender, region and income group also tends to be narrowed. However, we find that in several conditions the gap tends to be widened after the crisis. First case is between urban and rural people at elementary school. Second case is between income groups at elementary school. Third is between male and female at senior high school. Finally, the case is between income groups at tertiary education […]

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The issue of inequality in Indonesia has become more visible in public policy debate over the last year or so because the Gini coefficient has risen to its highest historically reported point. This raises two questions: first, what are the long-run trends in inequality by a range of measures of inequality (and are they consistent with the Gini trends)? Second, what are primary drivers of the recent rises in inequality? This paper makes new, consistent, long-run estimates of inequality in Indonesia using the national household survey, the Susenas for the period 1990–2012. The estimates suggest that inequality in Indonesia has risen quite significantly over the two decades. The 1990s were a period of relatively stable and moderate inequality by international standards. However, the rise in inequality is much more visible in the data for the 2000s, the era of political reform and democratisation. The magnitude of the rise in inequality is indeed quite spectacular: between 2002–2012, the Gini coefficient and the decile dispersion ratio have increased by roughly 20% and 50% respectively and rising inequality is evident across regions, provinces as well as across urban-rural dimensions. Interestingly, the data point towards an inequality convergence across provinces because the change in […]

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