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Spatial Networks, Labor Supply and Income Dynamics: Evidence from Indonesian Villages

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  • Yamauchi, Futoshi
  • Muto, Megumi
  • Chowdhury, Shyamal K.
  • Dewina, Reno
  • Sumaryanto, Sony

Abstract

This paper examines the impact of spatial connectivity development on household income growth and non-agriculture labor supply, combining household panel data and village census in Indonesia. Empirical results show that the impacts of the improvement of local road quality in the area (positively correlated with transportation speed) on income growth and the transition to non-agricultural labor markets depends on the distance to economic centers and household education. In particular, post-primary education significantly increases the benefit from the local spatial connectivity improvement in remote areas and labor transition to non-agricultural sectors. Education and local road quality are complementary, mutually increasing income growth and non-agricultural labor income in remote areas. The gain from improvements in local connectivity (measured by the average road quality) depends on village remoteness and initial household-level endowment.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 51571.

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Date of creation: 2009
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Handle: RePEc:ags:iaae09:51571

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Keywords: Income growth; Spatial Connectivity; Rural economy; Education; Indonesia; Community/Rural/Urban Development; Labor and Human Capital; O12; R40;

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Cited by:
  1. Wong, Ho Lun & Luo, Renfu & Zhang, Linxiu & Rozelle, Scott, 2013. "Providing quality infrastructure in rural villages: The case of rural roads in China," Journal of Development Economics, Elsevier, vol. 103(C), pages 262-274.

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