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Abstract
In early 1998 the government of Indonesia established several social safety net programmes to help the poor and the newly poor cope with the impact of the impending economic crisis, covering food security, employment creation, education, health, and community empowerment. This article evaluates the impact of these programmes on household welfare and poverty, utilising a panel data set of over 10,000 households which were visited four times in a 14-month period. The impact of participation in the social safety net programmes on household consumption is found to be generally positive. However, only the subsidised rice programme appears to have significantly reduced the risk of poverty among participating households.
Au début de l'année 1998, le gouvernement indonésien établit plusieurs programmes de protection sociale pour aider les pauvres et les nouveaux pauvres à faire face aux conséquences de la crise imminente, programmes qui couvrent la sécurité alimentaire, la création d'emplois, l'éducation, la santé et le renforcement des capacités communautaires. Cet article évalue l'impact de ces programmes sur le bien-être des ménages et la pauvreté, á partir d'un panel de données couvrant plus de 10 000 foyers qui ont été visités à quatre reprises sur une période de 14 mois. La portée de ces programmes sociaux sur la consommation des ménages s'avère positive dans l'ensemble. Cependant, seul le programme de subvention du riz semble avoir réduit significativement le risque de pauvreté parmi les ménages participants.
Notes
The authors are at the SMERU Research Institute, Jakarta, Indonesia. Lant Pritchett, Emmanuel Skoufias, and anonymous referees are thanked for their comments and suggestions; however, they are in no way responsible for the content of this paper. The authors are grateful to Statistics Indonesia (BPS) and UNICEF for providing access to the data.
1. The general inflation rate was 78 per cent in 1998, while food prices escalated by 118 per cent.
2. Studies on the social impact of the Indonesian crisis include, but are not limited to, Frankenberg et al. [Citation1999], Manning [Citation2000], Poppele et al. [Citation1999], Skoufias et al. [Citation2000], Strauss et al. [Citation2002], and Wetterberg et al. [Citation1999]
3. Here underemployment is defined as those who work less than 35 hours per week.
4. See Suryahadi and Sumarto [Citation2003]. In this study the chronic poor are defined as those currently poor who have expected consumption levels below the poverty line and, hence, most likely will remain poor in the future. The transient poor, meanwhile, are the poor who have expected consumption levels above the poverty line.
5. In Indonesia, these programmes are widely known as the ‘JPS’ programmes, an acronym of Jaring Pengaman Sosial or ‘Social Safety Net’.
6. The funding for these social safety net programmes came from the state budget as well as loans provided by the World Bank, Asian Development Bank, and bilateral donors, either directly through project support or indirectly through programme loans which provide budget support.
7. The social security programme was made compulsory for all formal sector employees through the 1992 law on Workers' Social Security [CitationMcLeod, 1993].
8. This sub-section is summarised from Sumarto et al. [Citation2002].
9. Poppele et al. [Citation1999] argue that some of the predictions on catastrophic social impacts of the crisis were not well founded.
10. These intended characteristics were not always achieved. See Sumarto et al. [Citation2002].
11. There were some changes in the social safety net programmes across fiscal years.
12. The programme was introduced in July 1998 in the Jakarta area and then expanded to cover the entire country.
13. The benefit was later increased to 20 kilograms in April 1999 and then changed again to between 10 and 20 kilograms in April 2000.
14. During the period under study, the exchange rate fluctuated around 10,000 Indonesian rupiah (Rp) per US dollar.
15. The official classification was created by the National Family Planning Agency (BKKBN).
16. Since the amount of subsidised rice was substantially below total consumption, in practice the programme served as equivalent to an income transfer. However, since the price was fixed in nominal terms, the magnitude of the income transfer was scaled to the need for food. In this sense the programme can be seen as a combination of income transfer and food security.
17. These ‘crash programmes’ were launched in December 1997 and lasted until the end of the fiscal year in March 1998.
18. In the fiscal year 1999/2000, however, padat karya programmes were cut back to only two programmes: the ‘Public Work Sector Padat Karya Programme’ and the ‘Special Initiative for Unemployed Women Programme’.
19. In 1999, Indonesia had 26 provinces, which were further divided into 341 districts.
20. A study on the social impact of the crisis in Indonesia was done by Skoufias et al. [Citation2000] based on the results of the May 1997 and August 1998 rounds.
21. In Indonesia, the official poverty line is constructed based on a food basket which produces 2,100 calories per capita per day plus a non-food basket which is deemed essential. This requires information on the quantities consumed. The price information, meanwhile, is required to put values to the poverty basket calculated.
22. SUSENAS is the National Socio-Economic Survey, a nationally representative household survey, covering all areas of the country. A part of SUSENAS is conducted every year, collecting information on the characteristics of over 200,000 households and over 800,000 individuals, including information on aggregated values of household consumption. This part of SUSENAS is known as the SUSENAS Core. Another part of SUSENAS is conducted every three years, specifically collecting information on very detailed quantities and values of consumption from around 65,000 households. This is the SUSENAS Consumption Module.
23. This sub-section is summarised from Suryahadi et al. [Citation2003].
24. The limitation of the data is that there is no indication of the extent of participation or magnitude of benefits received by beneficiaries. Hence, the analyses in this study are limited to comparing beneficiaries and non-beneficiaries of the social safety net programmes.
25. Household participation in the social safety net programmes may affect household income. Hence, in this and further analyses, the variable of change in household income is calculated net of the change in income due to household participation in the social safety net programmes. This is estimated by first regressing the changes in log of real income on household participation in the social safety net programmes. Then the residuals of this regression can be interpreted as the changes in log of real income net of changes in log of real income due to household participation in the social safety net programmes. The results of the regression are presented in in the Appendix.
26. The first three of the seven social organisations included in the estimations – housewives', neighbourhood, and youth organisations – are government-created social organisations, while the remaining four are truly social organisations.
27. The household characteristics included in the estimations are age of household head, household size, gender of household head, marital status of household head, education level of household head (unfinished primary as the base category), sector of household main income (agriculture as the base category), employment status of household head (unemployed as the base category), and household's assets ownership.
28. This suggests that the model in column B is more appropriate to be used for the basis of analysis.
29. The command used is DIVPROB in STATA, developed by Joe Harkness.