Essays on Inequality of Opportunities and Development Outcomes in Indonesia
Creators: name: Raya, Umbu
Publisher: name: The Australian National University
Year: 2019

description: The inter-group gap in human capital is still a prominent public policy concern in the developing world where centuries-old institutions such as caste, indigenous slavery, and religious system create persistent unequal opportunities for development within the practicing society. The concern about inequality arises due to the bulk of scientific evidence that found that group preferences matter more than individual preferences when it comes to inter-group contestation for political power and its subsequent discriminative distribution of economic resources based on identity politics. This results in inequality of opportunities and, to some extent, inequality of development outcomes. In Indonesia, the interplay between the social identities and their power base in affecting inter-group gap in opportunity and development outcomes has been part of public policy debate, but empirical evidence relating identity politics as the determinant of inequality of opportunities and human development outcomes is limited. As such, the goal of this thesis is to present empirical evidence on the abovementioned topic. The study covers three different institutions in Indonesia. The first case study is the case of indigenous slavery with a little inter-class power dynamic between the nobility and the commoner classes on Sumba Island. Our estimation on 2015 Traditional Residential Survey dataset reveals that when the nobility monopolizes the leadership positions in the modern government, this power is first and foremost good for the educational attainment of the nobility themselves and to a lesser extent good for the educational attainment of their direct subject that is the slave class. However, as expected, the nobility's power share is bad for the educational attainment of their direct power competitor that is the commoner. Interestingly, the shift of power to commoner class does not alter the gain received by the nobility but suppress the human capital gain for the slave class. Why does the slave class benefit more from the ruling regime of their master rather than from the ruling regime of the commoner class? The possible answer lies in the 'carrot and sticks' strategy used to maintain and make the slavery system profitable and the lesser of two evils principle played by the nobility class. Meanwhile, in the second case study, the case of inter-caste reversal of power in Bali, our estimation using SUSENAS 2002 show that the exogenous political shock in Bali reduced inter-caste gap in human capital acquisition and its subsequent labor market earning, but do not extend to business income and household consumption. The possible explanation for the reduction in gaps of human capital acquisition and earning is because the power takeover by the peasant caste suppresses the ability of the formerly ruling high caste to discriminate against the now ruling peasant caste and their opportunity for development. In the third case study on the religious-based opportunity and human capital disparities in Eastern Indonesia, using 1971 and 2010 Population Census data, our estimation results confirm our hypotheses that for overall population the colonial and post-colonial religious affiliations advantaged the educational achievement of the sub-population with similar religious identity to the national rulers. However, the finding does not apply for some sections of the population due to local minority advantage phenomenon. Indeed, in the case of both Muslim local minorities outperforming their Christian counterparts and Christian local minorities outperforming their Muslim counterparts, being identified with a ruling group does not generate advantages in human capital acquisition. To the best of our knowledge, this thesis would be the first study that quantifies the gaps of human capital acquisition and earning if traditional social stratification and group-power in the government entities has indeed fostered inequality in modern Indonesia.