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Overcoming Inequality and Poverty in SEA

0900–1030, Saturday 16 April 2016, L4

Chair:
Putu Geniki Lavinia Natih
University of Oxford
putu.natih@trinity.ox.ac.uk

List of Papers:

  • Paper 1: Income Inequality Dynamics in Decentralizing Indonesia
  • Paper 2: The impact of the Indonesian health financing reform on utilisation and equity
  • Paper 3: Skewed income data and cultural perception of self-assessed question in Indonesian household survey data: Challenges in the analysis of how the poor and the rich determine dimensions of subjective well-being differently

 

Paper 1: Income Inequality Dynamics in Decentralizing Indonesia

Isfandiarni Soenarto Rosidin
Vrije Universiteit Amsterdam
iin300@vu.nl

This paper studies income inequality in Indonesia, both from an international and regional perspective. Indonesia is the 4th most populous country in the world and currently undergoes rapid socio-economic changes i.e. decentralization and democratization. In recent years, economic development in Indonesia is characterized by high economic growth and a rapid increase of overall income inequality.

However, we show that from an international perspective, inequality in Indonesia used to be exceptionally low and relatively stable for a long period of time, until about the year 2001. From a regional perspective, we find that high income per capita is spatially correlated with natural resource endowments and is also concentrated in the capital city of Jakarta. Furthermore, we show that the variation of inequality across provinces is persistently decreasing over time. In contrast, the variation in income inequality across Indonesia’s islands is increasing over the last decade – suggesting the existence of increasing spatial disparities along a geographical dimension.

The observed overall increasing inequality is in line with the rapid rise in commodity (2003-2012) and other asset prices (including land and properties), which proportionately benefited the rich. Furthermore, democratization may have given rise to local elites, which also contributes to inequality patterns in Indonesia.

 

Paper 2: The impact of the Indonesian health financing reform on utilisation and equity

Darius Erlangga
University of York
de583@york.ac.uk

Indonesia has undergone major health reform in the past ten years. In 2004 the government launched health insurance for poor people (ASKESKIN) as a first step to achieving universal health coverage. Then, the government expanded its coverage to the near-poor population in 2008 and rebranded its name into JAMKESMAS and handed over its management to the Ministry of Health. Little is known about the extent of this reform in reducing the equity gap between the rich and poor population. This study is aiming to evaluate the impact of the health financing reform on equity in access to health care. For that purpose, I will utilise cross-sectional data from SUSENAS Modul Kesehatan dan Perumahan (MKP 2013). SUSENAS is an annual household survey in Indonesia, but MKP 2013 has an advantage in providing more detailed information on the health and housing condition. Since I can only use the cross-sectional survey, the endogeneity of health insurance becomes more prominent and will likely introduce bias in my estimate. Therefore, I will utilise propensity score matching to make the insured and uninsured population more comparable by controlling some important observable variables that will likely influence the uptake of health insurance. Next, based on the matched data I will employ the Concentration Index technique to measure and explain any detected inequity in health care utilisation. I will also discuss the methodological issue regarding the use of a household survey for health program evaluation, particularly in Indonesia, which could also be applied to other developing countries.

 

Paper 3: Skewed income data and cultural perception of self-assessed question in Indonesian household survey data: Challenges in the analysis of how the poor and the rich determine dimensions of subjective well-being differently

Suska Suska
University of York
ss1669@york.ac.uk

This study aims to analyse how income, health and education determine subjective well-being for each income group with Indonesian data and what the implications are to multidimensional inequality measures. The information of which dimension is more important in each expenditure quintile group can be useful for the policy making process.
Methodology of ordered probit model of subjective well-being on income, health and education is applied to whole observations and to each income group.  This is to find how people in different income groups value those dimensions – in determining the level of subjective well-being.
The first challenge in adopting this model is income data from household surveys. About five percent of respondents answered zero income in the survey. Considering the loss of observations, expenditure data is used as a proxy of income. Both income and expenditure data are right-skewed, showing data from high income level potential to be less reliable because of the difficulty in collecting survey data from rich people.  Another challenge is interpreting the self-assessed question of subjective well-being which is a question of the level of happiness.  The level was divided into four categories, very happy, happy, unhappy and very unhappy. About eighty percent of respondents answered happy, which could be interpreted as most-Indonesians are optimistic. On the other hand, the answer could be a reflection of the normal condition of happy being part of the cultural perception of happiness.
Adopting the model for each income group could capture the difference among the groups. To cope with the happiness level issue, a marginal effect on the highest level of happiness is applied in the model.