Effect of Growing Up Poor on Labor Market Outcomes: Evidence From Indonesia

Poverty and Inequality Analysis

We estimate the long-term impact of child poverty on adult labour market outcomes in Indonesia, a middle-income country. Our instrumental variable estimation shows that a child who lived in a poor family when aged between eight and 17 years old suffers from an 87% earnings penalty as adults relative to a child who did not grow up in a poor family. The direct effect remains large after we account for a large set of mediators. Depending on the set of mediators that we use, we estimate an earnings penalty of between 85% and 90%. Similarly, we do not find any evidence that receiving various government transfer programs mediates the effect of growing up poor on earnings as adults.

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Author 
Mayang Rizky
Daniel Suryadarma
Asep Suryahadi
Author(s)
Daniel Suryadarma
Research Area 
National
Keywords 
child poverty
labour market outcomes
government transfer programs
Indonesia
Publication Type 
Journal Article