Remittances and multidimensional energy poverty of households in Indonesia

Irpan Pebri Setiadi Hasibuan and Djoni Hartono

Economic Analysis and Policy, 2024, vol. 83, issue C, 29-41

Abstract: Energy poverty remains a significant challenge in developing nations, as exemplified by the situation in Indonesia. The connection between energy poverty and insufficient financial resources to fulfill basic energy requirements is significant. Remittances hold the potential to address energy poverty. This study seeks to explore the contribution of remittances to alleviating multidimensional energy poverty among households in Indonesia. Data for this research are sourced from the Indonesian Family Life Survey (IFLS) from 2007 to 2014. This study uses traditional migrant-sending districts as an instrumental variable to address endogeneity concerns arising from the reverse causality between remittances and energy poverty. The findings indicate that remittances from migrant workers can help alleviate multidimensional energy poverty in Indonesia, as demonstrated by the two-stage least-squares (2SLS) methodology. Households receiving assistance use the funds to increase their energy consumption and alleviate energy deprivation by directing resources toward electricity, appliances, and communication services. Additionally, the study highlights that economic disparities play a role in shaping the relationship between remittances and energy poverty.

Keywords: Remittances; Multidimensional energy poverty; Income inequality; Instrumental variable; Two-stage least square (search for similar items in EconPapers)
JEL-codes: C36 D63 F24 I32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:83:y:2024:i:c:p:29-41

DOI: 10.1016/j.eap.2024.05.022

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