Destined for Destitution: Intergenerational Poverty Persistence in Indonesia

Abstract

We estimate intergenerational poverty persistence in Indonesia using a panel dataset. This is the first such study done to look at the issue in the Indonesian context. In contrast to the majority of studies on this issue, we include controls for many household and individual characteristics, including one for living arrangements. Moreover, to circumvent data issues that plague earnings data in developing countries, we use chronic poverty status as a long-term parental welfare measure. We find substantial intergenerational mobility away from poverty among children from poor households. However, we find that children growing up in chronically poor households have a 31 percentage point higher risk of continuing to live in poverty as adults compared with children from non-chronically poor households.

Keywords: chronic poverty, intergenerational transmission, poverty dynamics, children