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Are Schooling and Roads Complementary? Evidence from Income Dynamics in Rural Indonesia

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

Abstract

We examine the impact of spatial connectivity on household income growth and non-agriculture labor supply in Indonesia by combining household panel data and village census data during the period of 1995–2007. Our empirical results show that the impacts of improved local road quality on income growth and the transition to non-agricultural labor markets depend 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. In contrast, the initial landholding size does not affect the benefit from improved road quality.

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  • Yamauchi, Futoshi & Muto, Megumi & Chowdhury, Shyamal & Dewina, Reno & Sumaryanto, Sony, 2011. "Are Schooling and Roads Complementary? Evidence from Income Dynamics in Rural Indonesia," World Development, Elsevier, vol. 39(12), pages 2232-2244.
  • Handle: RePEc:eee:wdevel:v:39:y:2011:i:12:p:2232-2244
    DOI: 10.1016/j.worlddev.2011.04.003
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    Cited by:

    1. Ivo Bischoff & Ferry Prasetyia, 2015. "Determinants of local public expenditures on education: empirical evidence for Indonesian districts between 2005 and 2012," MAGKS Papers on Economics 201532, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Liu, Yanyan & Yamauchi, Futoshi, 2013. "Population density, migration, and the returns to human capital and land: Highlights from Indonesia," IFPRI discussion papers 1271, International Food Policy Research Institute (IFPRI).
    3. Liu, Yanyan & Yamauchi, Futoshi, 2014. "Population density, migration, and the returns to human capital and land: Insights from Indonesia," Food Policy, Elsevier, vol. 48(C), pages 182-193.
    4. Yamauchi, Futoshi, 2012. "Long-term Impacts of Rice Price and Production Seasonality on Human Capital: Evidence from Rural Indonesia," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126163, International Association of Agricultural Economists.
    5. Yamauchi, Futoshi & Dewina, Reno, 2012. "Risks and spatial connectivity evidence from food price crisis in rural Indonesia," Food Policy, Elsevier, vol. 37(4), pages 383-389.
    6. Yamauchi, Futoshi, 2016. "Rising real wages, mechanization and growing advantage of large farms: Evidence from Indonesia," Food Policy, Elsevier, vol. 58(C), pages 62-69.
    7. Wouter Zant, 2015. "Trains, Trade and Transaction Costs: How does Domestic Trade by Rail affect Market Prices of Malawi Agricultural Commodities?," Tinbergen Institute Discussion Papers 15-055/V, Tinbergen Institute, revised 22 Jul 2016.
    8. Chamberlin, Jordan & Jayne, T.S., 2013. "Unpacking the Meaning of ‘Market Access’: Evidence from Rural Kenya," World Development, Elsevier, vol. 41(C), pages 245-264.

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