The Effect of Income Shocks and Credit Constraint on Child Labor Participation and Poverty: The Case of Indonesia

Pipit Pitriyan and Ahmad Komarulzaman

No 201002, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University

Abstract: Lies near the Eurasia and Indo-Australia’s border plate, Indonesia is categorized as natural disaster prone areas. It is common for Indonesian to experience earthquakes that occurs due to volcanic activities or ground movement. The most frequent natural disasters hit these districts are: landslide, earthquake, and flood. The other type of natural disaster is drought, which is more common to the rest of areas and more predictable compare to the previous disasters. For those who are living in disaster prone areas, disasters do not only destroy their assets, but also damages their source of income. Moreover, it can affect the decision of household related to the activity of their child. This study aims to analyze the effect of income shocks and credit constraints on poverty and child working activity in Indonesia. We will employ logit regression to estimate the effect of income shocks and credit constraints on income. Furthermore, multinomial logit estimate will be used to capture the effect of income shocks and credit constraints on household’s poverty status and household’s child activity. It is hipotized that the disaster-related-income-shock and constraints to acquire credit have significant effect on poverty as well as child working activity.

Keywords: shock; credit constraint; child labor; poverty; disaster (search for similar items in EconPapers)
JEL-codes: D19 D31 I32 J22 Q54 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2010-06, Revised 2010-06
New Economics Papers: this item is included in nep-sea
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