Three Essays on Livelihood and Development in Indonesia
Creators: name: Nasrudin, Rus'an
Publisher: name: The Australian National University
Year: 2019

description: This thesis compiles three papers on livelihood and development in Indonesia. The first quantifies the causal impact of having an alternative livelihood on household food security for people living on small Indonesian islands. The geographical context is chosen to acknowledge the severity of the food insecurity problem that they face. The empirical identification employs a laboratory experiment in the field to resolve the difficulties in conducting a full randomised control trial in small and remote islands. Results show that an additional income framed as from an alternative livelihood reduces expected household food insecurity. For every US$7.5 increase in permanent household weekly income, the food insecurity index is lowered by 2.3 points on a 0-15 scale. The magnitude of causal impact implies that a more substantial amount of intervention is needed than the existing cash transfer to entirely eradicate the feeling of food insecurity in the small Indonesian islands. The second paper examines economic assimilation profiles of Indonesian rural- urban migrants, which can be viewed as assessing the outcome of a livelihood diversification strategy. The empirical assessment utilises the feature of individual longitudinal data of the Rural- Urban Migration in China and Indonesia (RUMiCI) dataset in a novel approach for the context of the case study. The Indonesian context is chosen to add empirical finding to countries such as China and Vietnam, that have more restrictive policies than Indonesia. The focus of analysis is earnings as well as mental health, which is also considered novel for the context of the case study. Results demonstrate that internal Indonesian migrants do not experience earnings penalties subsequent to their arrival in urban areas. Indeed, their earnings persistently overtake those of urban natives over time. This assimilation profile suggests that internal migrants in a liberal internal migration institutional setting tend to be positively selected such that they outperform the urban native in the labour market. However, a series of further estimates also identifies that the migrants experience a worsening mental health condition subsequently. The inferior mental health outcome seems to be explained by decreasing social support over time rather than the number of hours spent at work. On combining the earning assimilation profile and mental health assimilation profile, it can be inferred that although these migrants are positively selected in the labour market, they are quite prone to depressive symptoms. Given the importance of social capital in livelihood development, the third paper investigates the potential role of education as a means for social capital formation. The paper argues that civic education might matter in shaping individual social capital skills following an appropriate period of exposure of individuals to such education in their lifecycle of social skills development, that is, adolescence. Specifically, the identification strategy exploits a natural experiment of state ideology courses in Indonesia (known as P4), which was discontinued unexpectedly owing to the Reformasi in 1998. However, the regression discontinuity design identifies no significant statistical difference in terms of social skills and a set of social capital measures between similar cohorts exposed and not exposed to the P4 programme. The programme only had a minor effect on cognitive score related to the courses. The results are consistent on using various robustness checks. The analysis concludes that the role of state ideology with indoctrination of the type observed in Soeharto's Indonesia to fabricate social capital element at the individual level is limited.