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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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