Cash Crop Choice and Income Dynamics in Rural Areas: Evidence for Post-Crisis Indonesia

Stephan Klasen, Jan Priebe and Robert Rudolf
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Jan Priebe: Georg-August-University Göttingen
Robert Rudolf: Georg-August-University Göttingen

No 33, Courant Research Centre: Poverty, Equity and Growth - Discussion Papers from Courant Research Centre PEG

Abstract: In this paper we investigate the factors affecting income levels, income growth, and poverty reduction in rural Indonesia following the crisis of 1997/98. We particu- larly investigate the relative roles of non-farm incomes, productivity improvements achieved via changes in crops versus improvements on the same crops, and demographic changes induced by the crisis on income dynamics in rural Indonesia. Using a unique household panel data set for Central Sulawesi that allows us to control for a large set of household and geographical characteristics, household fixed effects as well as endogeneity issues, we find that falling household size and the adoption and intensification of new cash crop varieties can explain a substantial part of the observed post-crisis developments. Moreover, we compare our results to cross-sectional data from SUSENAS, Indonesia\'s large scale national household survey. While the overall determinants of rural incomes are very similar across both data sets, we find that the importance of agricultural self-employed income seems to be higher in Central Sulawesi than in most other parts of Indonesia. Although several factors could explain these differences, lessons from our Central Sulawesi data suggests that unexploited potentials in the production of cash crops in other areas of Indonesia might contribute to these findings.

Keywords: Crop choice; Income diversification; non-farm sector; rural development; Indonesia (search for similar items in EconPapers)
JEL-codes: I31 Q12 Q15 R13 (search for similar items in EconPapers)
Date: 2010-05-26
New Economics Papers: this item is included in nep-agr, nep-dev and nep-sea
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Related works:
Journal Article: Cash crop choice and income dynamics in rural areas: evidence for post-crisis Indonesia (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:got:gotcrc:033

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