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The evolution of poverty during the crisis in Indonesia, 1996-99


  • Suryahadi, Asep*Sumarto, Sudarno*Suharso, Yusuf*


Poverty is intrinsically a complex social construct, and even when it is narrowly defined by a deficit of consumption spending, many thorny issues arise in setting an appropriate"poverty line". The authors limit themselves to examining how poverty - defined on a consistent, welfare-comparable basis - changed in Indonesia during a series of crises that began in august 1997. Using various data sets and studies, they develop a consistent series on poverty's evolution from February 1996 to August 1999. Specifically, they study the appropriate method for comparing changes in poverty between the February 1996 and February 1999 Susenas surveys. To set a poverty line for 1999 that is conceptually comparable to that for 1996 involves a standard issue of price deflation: How much would it cost in 1999 to purchase a bundle of goods that would produce the same level of material welfare as the money spent at the poverty line in 1996? Empirically, given major changes in the relative prices of food, the key issue is the weight given food prices in the price index. Using different deflators produces a range of plausible estimates, but they produce a range of plausible estimates, but they produce two"base cases": one working forward from 1996, and one working backward from 1999. If one accepts the official figure of 11.34 percent for February 1996, poverty increased from the immediate pre-crisis rate of about 7-8 percent in the second half of 1997, to the post-crisis rate of about 18-20 percent by September 1998, and 18.9 percent in February 1999. If one begins from the best estimate of the poverty rate in February 1999 (27.1 percent), poverty rose by 9.6 percentage points from 17.5 percent in February 1996. Since February 1999, poverty appears to have subsided considerably but - two years after the crisis started - is still substantially higher than it was immediately before the crisis.

Suggested Citation

  • Suryahadi, Asep*Sumarto, Sudarno*Suharso, Yusuf*, 2000. "The evolution of poverty during the crisis in Indonesia, 1996-99," Policy Research Working Paper Series 2435, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2435

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    References listed on IDEAS

    1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    2. Frankenberg, E. & Thomas, D. & Beegle, K., 1999. "The Real Costs of Indonesia's Economic Crisis: Preliminary Findings from the Indonesia Family Life Surveys," Papers 99-04, RAND - Labor and Population Program.
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    Cited by:

    1. Sumarto, Sudarno & Suryahadi, Asep, 2001. "Social Redistribution and Social Safety Net: The case of Indonesia during the Asian Financial Crisis," MPRA Paper 60286, University Library of Munich, Germany.
    2. Andrew van Hulten & Michael Webber, 2010. "Do developing countries need 'good' institutions and policies and deep financial markets to benefit from capital account liberalization?," Journal of Economic Geography, Oxford University Press, vol. 10(2), pages 283-319, March.
    3. James B. Ang, 2010. "Finance and Inequality: The Case of India," Southern Economic Journal, Southern Economic Association, vol. 76(3), pages 738-761, January.
    4. Sumarto, Sudarno & Suryahadi, Asep, 2000. "Establishing Reliable Social Safety Net Programs: Lessons from the Indonesian Crisis Experience," MPRA Paper 60089, University Library of Munich, Germany.
    5. Skoufias, Emmanuel, 2002. "The sensitivity of calorie-income demand elasticity to price changes," FCND discussion papers 141, International Food Policy Research Institute (IFPRI).
    6. Pritchett, Lant, 2005. "The political economy of targeted safety nets," Social Protection and Labor Policy and Technical Notes 31498, The World Bank.
    7. Arsenio M Balisacan, 2004. "Averting Hunger and Food Insecurity in Asia," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 1(1), pages 39-60, June.
    8. Guido Sandleris & Mark L. J. Wright, 2014. "The Costs of Financial Crises: Resource Misallocation, Productivity, and Welfare in the 2001 Argentine Crisis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 87-127, January.
    9. Gonzalez, Eduardo T. & Mendoza, Magdalena L., 2003. "Governance in Southeast Asia: Issues and Options," Research Paper Series RPS 2002-06, Philippine Institute for Development Studies.
    10. Raghbendra Jha & Woojin Kang & Hari K. Nagarajan & Kailash C. Pradhan, 2012. "Vulnerability as Expected Poverty in Rural India," ASARC Working Papers 2012-04, The Australian National University, Australia South Asia Research Centre.
    11. repec:dau:papers:123456789/5130 is not listed on IDEAS
    12. Pritchett, Lant & Sumarto, Sudarno & Suryahadi, Asep, 2000. "A Quick and Dirty Estimate of Measurement Error in Household Survey Consumption Expenditures: Application to Indonesian Data," MPRA Paper 60936, University Library of Munich, Germany.


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