Poverty, Education, and Health in Indonesia: Who Benefits from Public Spending?

63 Pages Posted: 20 Apr 2016

See all articles by Peter F. Lanjouw

Peter F. Lanjouw

World Bank - Development Research Group (DECRG)

Menno Prasad Pradhan

Vrije Universiteit Amsterdam, School of Business and Economics; University of Amsterdam - Faculty of Economics and Business (FEB)

Fadia Saadah

World Bank - East Asia and Pacific Region

Haneen Sayed

World Bank

Robert A. Sparrow

Vrije Universiteit Amsterdam

Date Written: December 2001

Abstract

Static and dynamic incidence analysis underscores the importance of Indonesia's public spending on primary health care to the poor. In education, evidence suggests that the poor are well represented in primary schooling and would benefit from increased public provisioning of secondary schooling.

Lanjouw and his coauthors investigate the extent to which Indonesia's poor benefit from public and private provisioning of education and health services. Drawing on multiple rounds of SUSENAS household surveys, they document a reversal in the rate of decline in poverty and a slowdown in social sector improvements resulting from the economic crisis in the second half of the 1990s.

Carrying out traditional static benefit-incidence analysis of public spending in education and health, the authors find patterns consistent with experience in other countries: spending on primary education and primary health care tends to be pro-poor, while spending on higher education and hospitals is less obviously beneficial to the poor. These conclusions are tempered once one allows for economies of scale in consumption which weaken the link between poverty status and household size.

The authors also examine the incidence of changes in government spending. They find that the marginal incidence of spending in both junior and senior secondary schooling is more progressive than what static analysis would suggest, consistent with "early capture" by the non-poor of education spending. In the health sector marginal and average incidence analysis point to the same conclusion: the greatest benefit to the poor would come from an increase in primary health care spending.

This paper - a joint product of the Poverty Team, Development Research Group, and the Poverty Reduction and Economic Management Sector Unit, East Asia and Pacific Region - is part of a larger effort in the group to trace the distributional impact of public spending decisions. The authors may be contacted at planjouw@worldbank.org, mpradhan@worldbank.org, fsaadah@worldbank.org, or hsayed@worldbank.org.

Suggested Citation

Lanjouw, Peter F. and Pradhan, Menno and Saadah, Fadia and Sayed, Haneen and Sparrow, Robert A., Poverty, Education, and Health in Indonesia: Who Benefits from Public Spending? (December 2001). World Bank Policy Research Working Paper No. 2739. Available at SSRN: https://ssrn.com/abstract=634451

Peter F. Lanjouw (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
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Washington, DC 20433
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202-473-4529 (Phone)
202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/planjouw

Menno Pradhan

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31(0)20 444 6137 (Phone)
+31(0)20 444 6127 (Fax)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Fadia Saadah

World Bank - East Asia and Pacific Region ( email )

Washington, DC 20433
United States

Haneen Sayed

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Robert A. Sparrow

Vrije Universiteit Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands

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