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Are Schooling and Roads Complementary? Evidence from Income Dynamics in Rural Indonesia

Futoshi Yamauchi (), Megumi Muto, Shyamal Chowdhury (), Reno Dewina and Sony Sumaryanto

World Development, 2011, vol. 39, issue 12, 2232-2244

Abstract: We examine the impact of spatial connectivity on household income growth and non-agriculture labor supply in Indonesia by combining household panel data and village census data during the period of 1995–2007. Our empirical results show that the impacts of improved local road quality on income growth and the transition to non-agricultural labor markets depend on household education and distance to economic centers. In particular, post-primary education significantly increases the benefit from the improvement of local spatial connectivity in remote areas, promoting labor transition to non-agricultural sectors. Education and local road quality are complementary, mutually increasing non-agricultural labor supply and income in remote areas. In contrast, the initial landholding size does not affect the benefit from improved road quality.

Keywords: income growth; education; landholding; spatial connectivity; rural economy; Indonesia (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1016/j.worlddev.2011.04.003

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