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Human Capital, Mobility, and Income Dynamics: Evidence from Indonesia

  • Dewina, Reno
  • Yamauchi, Futoshi

This paper examines the effects of household formation on income dynamics using panel data from Indonesia. The focus of our analysis is to explore the determinants of household income dynamics in 1995-2007 when we change the definition of household. Empirical results show that intergenerational gap in education (i.e., education growth) as well as the number of young and prime-age members in the household play important roles in determining income dynamics, especially when we include out-migrants. This is consistent with individual migration behavior: the young and educated tend to move out of their villages over the 12 years. We also found that out-migration increases net-remittances to the household. The results indicate the importance of human capital as well as endogenous migration (attrition) in rural household income dynamics.

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Paper provided by JICA Research Institute in its series Working Papers with number 11.

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Date of creation: 01 Mar 2010
Date of revision:
Handle: RePEc:jic:wpaper:11
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  1. Duncan Thomas & Elizabeth Frankenberg & James P. Smith, 2000. "Lost But Not Forgotten: Attrition and Follow-up in the Indonesian Family Life Survey," Working Papers 00-03, RAND Corporation Publications Department.
  2. Schwartz, Aba, 1976. "Migration, Age, and Education," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 701-19, August.
  3. Foster, Andrew D & Rosenzweig, Mark R, 2002. "Household Division and Rural Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 839-69, October.
  4. Keijiro Otsuka & Takashi Yamano, 2006. "Introduction to the special issue on the role of nonfarm income in poverty reduction: evidence from Asia and East Africa," Agricultural Economics, International Association of Agricultural Economists, vol. 35(s3), pages 393-397, November.
  5. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
  6. Schultz, T Paul, 1982. "Lifetime Migration within Educational Strata in Venezuela: Estimates of a Logistic Model," Economic Development and Cultural Change, University of Chicago Press, vol. 30(3), pages 559-93, April.
  7. Mark R. Rosenzweig, 2003. "Payoffs from Panels in Low-Income Countries: Economic Development and Economic Mobility," American Economic Review, American Economic Association, vol. 93(2), pages 112-117, May.
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