Are Schooling and Roads Complementary? Evidence from Rural Indonesia

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

No 10, Working Papers from JICA Research Institute

Abstract: This paper examines the impact of spatial connectivity on household income growth and non-agriculture labor supply, combining household panel data and village census in Indonesia during the period of 1995-2007. Empirical results show that the impacts of improved local road quality on income growth and the transition to non-agricultural labor markets depends 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.

Keywords: Income growth; Education; Landholding; Spatial connectivity; Rural economy; Indonesia (search for similar items in EconPapers)
Date: 2010-03-01
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