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Are Schooling and Roads Complementary? Evidence from Rural Indonesia

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

Abstract

This paper examines the impact of spatial connectivity on household income growth and non-agriculture labor supply, combining household panel data and village census in Indonesia during the period of 1995-2007. Empirical results show that the impacts of improved local road quality on income growth and the transition to non-agricultural labor markets depends on household education and distance to economic centers. In particular, post-primary education significantly increases the benefit from the improvement of local spatial connectivity in remote areas, promoting labor transition to non-agricultural sectors. Education and local road quality are complementary, mutually increasing non-agricultural labor supply and income in remote areas.

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File URL: http://hdl.handle.net/10685/24
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File URL: http://repository.ri.jica.go.jp/dspace/bitstream/10685/24/1/JICA-RI_WP_No.10_2010.pdf
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Bibliographic Info

Paper provided by JICA Research Institute in its series Working Papers with number 10.

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Date of creation: 01 Mar 2010
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Handle: RePEc:jic:wpaper:10

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Keywords: Income growth ; Education ; Landholding ; Spatial connectivity ; Rural economy ; Indonesia;

References

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  1. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
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  4. Marcel Fafchamps & Forhad Shilpi, 2003. "Cities and Specialization: Evidence from South Asia," Economics Series Working Papers 139, University of Oxford, Department of Economics.
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  8. Fan, Shenggen & Zhang, Linxiu & Zhang, Xiaobo, 2004. "Reforms, Investment, and Poverty in Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 395-421, January.
  9. Minten, Bart & Kyle, Steven, 1999. "The effect of distance and road quality on food collection, marketing margins, and traders' wages: evidence from the former Zaire," Journal of Development Economics, Elsevier, vol. 60(2), pages 467-495, December.
  10. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
  11. Yamauchi, Futoshi, 2003. "Are experience and schooling complementary?," FCND discussion papers 166, International Food Policy Research Institute (IFPRI).
  12. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
  13. World Bank, 2003. "World Development Indicators 2003," World Bank Publications, The World Bank, number 13920, August.
  14. Binswanger, Hans P. & Khandker, Shahidur R & Rosenzweig, Mark R., 1989. "How infrastructure and financial institutions affect agricultural output and investment in India," Policy Research Working Paper Series 163, The World Bank.
  15. Dewina, Reno & Yamauchi, Futoshi, 2010. "Human Capital, Mobility, and Income Dynamics: Evidence from Indonesia," Working Papers 11, JICA Research Institute.
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