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Urban-Rural Differences in Costs of Living and Their Impact on Poverty Measures

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  • Abuzar Asra
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    Abstract

    This note demonstrates empirically the importance of urban-rural price differences and inflation figures in poverty analysis. Using data from the National Socio-Economic Survey (Survei Sosial Ekonomi Nasional, widely known as Susenas), it shows that the urban-rural food price differential during the period 1987-96 was 13-16%, not 28-52% as impli by the 'official' food poverty lines. The urban-rural poverty comparisons and the components of change in simulated poverty estimates presented here therefore differ from those based on the 'official' figures. They indicate that migration to urban areas between 1987 and 1996 accounts for a significant part of the observed decline in poverty. The paper concludes that it is essential to use accurate urban-rural cost of living differences in deriving aggregate, urban and rural poverty estimates.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/00074919912331337687
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Bulletin of Indonesian Economic Studies.

    Volume (Year): 35 (1999)
    Issue (Month): 3 ()
    Pages: 51-69

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    Handle: RePEc:taf:bindes:v:35:y:1999:i:3:p:51-69

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    1. Ravallion, Martin & van de Walle, Dominique, 1989. "Cost of living differences between urban and rural areas in Indonesia," Policy Research Working Paper Series 341, The World Bank.
    2. Elizabeth Frankenberg & Duncan Thomas & Kathleen Beegle, 1999. "The Real Costs of Indonesian Economic Crisis: Preliminary Findings from the Indonesia Family Life Surveys," Working Papers 99-04, RAND Corporation Publications Department.
    3. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
    4. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
    5. Arsenio M. Balisacan, 2001. "Poverty in the Philippines : An Update and Reexamination," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 38(1), pages 15-52, June.
    6. Ravallion, Martin & Huppi, Monika, 1991. "Measuring Changes in Poverty: A Methodological Case Study of Indonesia during an Adjustment Period," World Bank Economic Review, World Bank Group, vol. 5(1), pages 57-82, January.
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    Cited by:
    1. Robert J. Hill & Iqbal A. Syed, 2012. "Accounting for Unrepresentative Products and Urban-Rural Price Differences in International Comparisons of Real Income: An Application to the Asia-Pacific Region," Graz Economics Papers 2012-07, University of Graz, Department of Economics.
    2. Bas van Leeuwen & Peter Foldvari, 2012. "The development of inequality and poverty in Indonesia, 1932-1999," Working Papers 0026, Utrecht University, Centre for Global Economic History.
    3. Dhanani, Shafiq & Islam, Iyanatul, 2002. "Poverty, Vulnerability and Social Protection in a Period of Crisis: The Case of Indonesia," World Development, Elsevier, vol. 30(7), pages 1211-1231, July.

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