Poverty dynamics in Indonesia: empirical evidence from three main approaches

Rudi Purwono, Wahyu Wisnu Wardana, Tri Haryanto and M. Khoerul Mubin

World Development Perspectives, 2021, vol. 23, issue C

Abstract: Although the number of studies on poverty dynamics in Indonesia is growing, the findings remain inconclusive. This study aims to reexamine the poverty dynamics in Indonesia by using three main approaches: the spell approach, the component approach, and the equally distributed equivalent (EDE) poverty gap approach. The study employed household panel data from the National Socio-Economic Survey of Indonesia (Susenas) 2008 and 2010 and also the FGT index. The analysis shows that the spell approach tends to underestimate chronic poverty (households remain poor in two consecutive periods of observations). It estimates that 6.7% of the total households experienced chronic poverty. Meanwhile, the conclusion of poverty dynamics under the component approach is sensitive to the choice of poverty parameter of the FGT index. By employing the poverty parameter of α = 0, around 11.07% of total households were classified as chronically poor (average expenditure below the poverty lines). However, applying the poverty gap (α = 1) and poverty severity (α = 2) indicates that the chronic component reached 63.16% and 54.15% of the total poverty, respectively. Likewise, the EDE poverty gap approach also suggests that poverty in Indonesia is mainly chronic at 92% of the total component of poverty. The high percentage of chronic poverty is contributed by the significant cost of inequality.

Keywords: Poverty dynamics; Chronic poverty; Transient poverty; Poverty alleviation; Inequality; Indonesia (search for similar items in EconPapers)
JEL-codes: D31 D63 I32 O53 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S245229292100062X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wodepe:v:23:y:2021:i:c:s245229292100062x

DOI: 10.1016/j.wdp.2021.100346

Access Statistics for this article

World Development Perspectives is currently edited by Ashwini Chhatre

More articles in World Development Perspectives from Elsevier
Bibliographic data for series maintained by Catherine Liu ().