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Poverty, education, and health in Indonesia : who benefits from public spending?

  • Lanjouw, Peter
  • Pradhan, Menno
  • Saadah, Fadia
  • Sayed, Haneen
  • Sparrow, Robert

The authors investigate the extent to which Indonesia's poor benefit from public and private provisioning of education and health services. Drawing on multiple rounds of SUSENAS household surveys, they document a reversal in the rate of decline in poverty and a slowdown in social sector improvements resulting from the economic crisis in the second half of the 1990s. Carrying out traditional static benefit-incidence analysis of public spending in education and health, the authors find patterns consistent with experience in other countries: spending on primary education and primary health care tends to be pro-poor, while spending on higher education and hospitals is less obviously beneficial to the poor. These conclusions are tempered once one allows for economies of scale in consumption which weaken the link between poverty status and household size. The authors also examine the incidence of changes in government spending. They find that the marginal incidence of spending in both junior and senior secondary schooling is more progressive than what static analysis would suggest, consistent with"early capture"by the non-poor of education spending. In the health sector marginal and average incidence analysis point to the same conclusion: the greatest benefit to the poor would come from an increase in primary health care spending.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2739.

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Date of creation: 31 Dec 2001
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Handle: RePEc:wbk:wbrwps:2739
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  1. McMahon, Walter W. & Boediono, Walter W., 1992. "Universal basic education: An overall strategy of investment priorities for economic growth," Economics of Education Review, Elsevier, vol. 11(2), pages 137-151, June.
  2. Pradhan, Menno, 1998. "Enrolment and Delayed Enrolment of Secondary School Age Children in Indonesia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(4), pages 413-30, November.
  3. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  4. Emmanuel Skoufias, 1999. "Parental Education and child Nutrition in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(1), pages 99-119.
  5. Lanjouw, Peter & Ravallion, Martin, 1999. "Benefit Incidence, Public Spending Reforms, and the Timing of Program Capture," World Bank Economic Review, World Bank Group, vol. 13(2), pages 257-73, May.
  6. Heckman, James J, 1990. "Varieties of Selection Bias," American Economic Review, American Economic Association, vol. 80(2), pages 313-18, May.
  7. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-34, November.
  8. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-82, September.
  9. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," World Bank Economic Review, World Bank Group, vol. 8(1), pages 75-102, January.
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