Poverty and Inequality Analysis
Vulnerability is an important aspect of households' experience of poverty. Many households, while not currently "in poverty", recognize that they are vulnerable to events that could easily push them into poverty-a bad harvest, a lost job, an unexpected expense, an illness, an economic downturn.
The economic crisis has caused a clear deterioration in the welfare of the people of Indonesia. While there are many dimensions to individual and family welfare, here we focus on only one: a consumption expenditures based measure of "poverty." Even within the measurement of poverty we address only two issues.
Using cross-section data from household surveys, we estimate several categories of household poverty and vulnerability in Indonesia by combining the available information on current consumption levels, estimates of vulnerability to poverty, and estimates of expected consumption levels.
During the economic crisis, the headcount poverty rate in Indonesia changed relatively quickly in short periods of time, implying that there were a large number of households which moved in and out of poverty relatively frequently and experienced relatively short periods of poverty. This study finds that changes that took place at the household level were greater than what were indicated by the aggregate figures.
This study is the first attempt to systematically examine the impact of bad governance practices in Indonesia on poverty reduction. Indonesia is a country that has endured bad governance for a long period, but has also sustained significant poverty reduction.
