Effect of Growing Up Poor on Labor Market Outcomes: Evidence From Indonesia

Mayang Rizky, Daniel Suryadarma and Asep Suryahadi

Journal of International Development, 2025, vol. 37, issue 4, 938-950

Abstract: We estimate the long‐term impact of child poverty on adult labour market outcomes in Indonesia, a middle‐income country. Our instrumental variable estimation shows that a child who lived in a poor family when aged between eight and 17 years old suffers from an 87% earnings penalty as adults relative to a child who did not grow up in a poor family. The direct effect remains large after we account for a large set of mediators. Depending on the set of mediators that we use, we estimate an earnings penalty of between 85% and 90%. Similarly, we do not find any evidence that receiving various government transfer programs mediates the effect of growing up poor on earnings as adults.

Date: 2025
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https://doi.org/10.1002/jid.3993

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:37:y:2025:i:4:p:938-950

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