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A first step towards meeting Indonesia's ambition for universal health insurance was made in 2005 with the introduction of the Health Insurance for the Poor (Askeskin) program, a subsidized social health insurance for the poor and the informal sector. This scheme covered basic healthcare in public health clinics and hospital inpatient care. In this paper we investigate targeting and impact of the Askeskin program using household panel data. We find that the program is indeed targeted to the poor and those most vulnerable to catastrophic out-of-pocket health payments. The public health insurance improves access to healthcare in that it increases utilization of outpatient healthcare among the poor, while out-of-pocket spending seems to have increased for Askeskin insured in urban areas.
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We examine the marginal effects of decentralized public health spending by incorporating estimates of behavioural responses to changes in health spending in benefit incidence analysis. The analysis is based on a panel dataset of 207 Indonesian districts over the period from 2001 to 2004. We show that district public health spending is largely driven by central government transfers, with an elasticity of around 0.9. We find a positive effect of public health spending on utilization of outpatient care in the public sector for the poorest two quartiles. We find no evidence that public expenditures crowd out utilization of private services or household health spending. Our analysis suggests that increased public health spending improves targeting to the poor, as behavioural changes in public health care utilization are pro-poor. Nonetheless, most of the benefits of the additional spending accrued to existing users of services, as initial utilization shares outweigh the behavioural responses.
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We examine the effects of trade liberalization on child work in Indonesia. Our estimation strategy identifies geographical differences in the effects of trade policy through district level exposure to reduction in import tariff barriers. We use a balanced panel of 261 districts, based on four rounds (1993 to 2002) of the Indonesian annual national household survey (Susenas), and relate workforce participation of children aged 10-15 to geographic variation in relative tariff exposure. Our main findings show that increased exposure to trade liberalization is associated with a decrease in child work among the 10 to 15 year olds. The effects of tariff reductions are strongest for children from low skill backgrounds and in rural areas. Favorable income effects for the poor, induced by trade liberalization, are likely to be the dominating effects underlying these results.
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In 2001-02, Argentina experienced a wrenching economic crisis. Plan Jefes, implemented in May 2002, was Argentina’s institutional response to the increase in unemployment and poverty triggered by the crisis. The program provided a social safety net and appears to have successfully protected some families against indigence. Despite this success, the continued existence of the program, which provides benefits to eligible unemployed individuals for an unlimited duration, may have unappealing long-term consequences. Reliance on the plan may reduce the incentive to search for work and in the long-run may damage individual employability and perpetuate poverty. Motivated by these concerns, this paper examines the effect of participating in Plan Jefes on the probability of exiting from unemployment. Regardless of the data set, the specification and the empirical approach, the evidence assembled in this paper shows that for the period under analysis individuals enrolled in the Plan are between 12 to 19 percentage points less likely to transit to employment as compared to individuals who applied but did not join the Plan. The negative effect of the program tends to be larger for females and as a consequence, over time, the program becomes increasingly feminized. Prima facie, the estimates suggest that programs such as Plan Jefes need to re-consider the balance between providing a social safety net and dulling job-search incentives.
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With the introduction of subsidized social health insurance for the poor in, Indonesia made a first move towards meeting its ambitions for universal health insurance coverage. This paper discusses policy lessons and future challenges for universal coverage, drawing on recent experiences with social health insurance and other health financing programs for the poor over the past decade. The discussion is focused on equity impacts and scope for social risk management under social health insurance, and in particular its effectiveness in improving access to health care and financial protection for the poor.
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Over the last decade Ecuador has experienced a strong increase in financial transfers from migrated workers, amounting to 6.4 percent of GDP and 31.5 percent of total exports of goods and services in 2005. This paper investigates how remittances via trans-national networks affect human capital investments through relaxing resource constraints and facilitate households in consumption smoothing by reducing vulnerability to economic shocks. In particular, we explore the effects of remittances on school enrolment and child work in Ecuador. Identification relies on instrumental variables, exploiting information on source countries of remittances and regional variation in the availability of bank offices that function as formal channels for sending remittances. Our results show that remittances increase school enrolment and decrease incidence of child work, especially for girls and in rural areas. Furthermore, we find that aggregate shocks are associated with increased work activities, while remittances are used to finance education when households are faced with these shocks. This suggests that liquidity constraints and vulnerability to covariate risk are especially relevant in rural areas, as it affects household's investments in human capital of school age children. In this context both child labour supply and trans-national remittances serve as coping mechanisms.
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This paper looks at targeting performance of the Indonesian health card programme that was implemented in August 1998 to protect access to health care for the poor during the Indonesian economic crisis. By February 1999, 22 million people had received a health card. The health card provided a user fee waiver for public health care. Targeting of the health card was pro-poor, but with considerable leakage to the non-poor. Utilisation of the health card for outpatient care was also pro-poor, but conditional on ownership, the middle quintiles were more likely to use the card. Targeting of the health card followed a decentralised design combining geographic targeting with community based targeting instruments. This design facilitated the rapid implementation of the programme, but targeting performance suffered from a lack of information on the regional impact of the crisis, while at local level not all barriers to accessing health care services were overcome by the health card. Indirect and direct costs of seeking health care seem to be the main deterrent to using the health card, which are higher in more remote areas. Micro-simulations show that geographic targeting can contribute considerably to improving targeting performance, but most of the targeting gains are to be made at the local level, with district programme management and public health care providers. This study highlights the need for adequate and up to date social welfare indicators. In addition, further research would need to focus on how local knowledge can be utilised for signalling poverty dynamics and local barriers to access.
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The Indonesian Social Safety Net health card program was implemented in response to the economic crisis that hit Indonesia in 1997, to preserve access to health care services for the poor. Health cards were allocated to poor households, entitling them to subsidized care from public health care providers. The providers received budgetary support to compensate for the extra demand. This article focuses on the effect of the program on primary outpatient health care use, disentangling the direct effect of allocating health cards from the indirect effect of government transfers to health care facilities. For poor health card owners the program resulted in a net increase in use of outpatient care, while for nonpoor health card owners the program resulted mainly in a substitution from private to public health care. The largest effect of the program seems to have come from a general increase in the supply of public services resulting from the budgetary support to public providers. These benefits seem to have been captured mainly by the nonpoor. As a result, most of the benefits of the health card program went to the nonpoor, even though distribution of the health cards was propoor. The results suggest that had the program, in addition to targeting the poor, established a closer link between provision of services to the target groups and funding, the overall results would have been more propoor.
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This paper analyses the impact of an Indonesian scholarship programme, which was implemented in 1998 to preserve access to education for the poor during the economic crisis. Scholarships were targeted pro-poor and the allocation process followed a decentralized design, involving both geographic and individual targeting. The identification strategy exploits this decentralized structure, relying on instrumental variables constructed from regional mistargeting at the initial phase of allocation. The programme has increased enrolment, especially for primary school-aged children from poor rural households. Moreover, the scholarships seem to have assisted households in smoothing consumption during the crisis, relieving pressure on households’ investments in education and utilization of child labour.
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When an economic crisis hits, a primary policy concern in developing countries is how social services can be protected and, in particular, how access to health and education for the poor can be maintained. Using the Indonesian Social Safety Net as case study, this dissertation investigates the effectiveness of narrowly targeted demand side interventions in health and education as a tool to protect access to these services for the poor in times of crisis. The studies in this dissertation address targeting performance and dynamic marginal benefit incidence analysis, as well as the impact of the programmes on education attainment, child labour and utilisation of outpatient health care.
[Abstract published in Bulletin of Indonesian Economic Studies, vol. 43, no. 3, December 2007, pp. 400-401 (size 169 Kb)] [Back to top]

In this paper we investigate the extent to which Indonesia's poor benefit from public and private provisioning of education and health services. Drawing on multiple rounds of SUSENAS household surveys, we document a reversal in the rate of decline in poverty and a slowdown in social sector improvements resulting from the economic crisis in the second half of the 1990s. Carrying out traditional static benefit-incidence analysis of public spending in education and health, we find patterns consistent with experience in other countries: spending on primary education and primary health care tends to be pro-poor, while spending on higher education and hospitals is less obviously beneficial to the poor. These conclusions are tempered once one allows for economies of scale in consumption which weaken the link between poverty status and household size. We also examine the incidence of changes in government spending and find that the marginal incidence of spending in both junior and senior secondary schooling is more progressive than what static analysis would suggest, consistent with "early capture" by the non-poor of education spending. In the health sector marginal and average incidence analysis point to the same conclusion: the greatest benefit to the poor would come from an increase in primary health care spending.
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This study draws on purposive survey data of approximately 600 households in peri-urban Tanzania to describe the degree and nature of non-farm diversification in these settings. With the exception of relatively dynamic cities such as Dar es Salaam and Arusha, overall nonfarm incomes shares are not unambiguously higher than in rural areas as a whole. Non-farm income shares rise sharply and monotonically with quintiles defined in terms of per capita food consumption. In that sense the sector appears to offer an important route out of poverty. The evidence suggests that education, and access to infrastructure, are important determinants of non-farm incomes in peri-urban areas. Women appear to be poorly placed vis a` vis the non-farm sector, even after controlling for education, age and other characteristics. Kinship and tribal affinities, and time devoted to communal activities, appear to deter entrepreneurial activity and non-farm employment, but trust in officials and public servants and strong heterogeneous village associations, are important in stimulating non-farm activity.
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