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Urban-Rural Differences in Costs of Living and Their Impact on Poverty Measures

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  • Abuzar Asra

Abstract

This note demonstrates empirically the importance of urban-rural price differences and inflation figures in poverty analysis. Using data from the National Socio-Economic Survey (Survei Sosial Ekonomi Nasional, widely known as Susenas), it shows that the urban-rural food price differential during the period 1987-96 was 13-16%, not 28-52% as impli by the 'official' food poverty lines. The urban-rural poverty comparisons and the components of change in simulated poverty estimates presented here therefore differ from those based on the 'official' figures. They indicate that migration to urban areas between 1987 and 1996 accounts for a significant part of the observed decline in poverty. The paper concludes that it is essential to use accurate urban-rural cost of living differences in deriving aggregate, urban and rural poverty estimates.

Suggested Citation

  • Abuzar Asra, 1999. "Urban-Rural Differences in Costs of Living and Their Impact on Poverty Measures," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(3), pages 51-69.
    • Handle: RePEc:taf:bindes:v:35:y:1999:i:3:p:51-69
    DOI: 10.1080/00074919912331337687
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    References listed on IDEAS

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    1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
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    4. Ravallion, Martin & Huppi, Monika, 1991. "Measuring Changes in Poverty: A Methodological Case Study of Indonesia during an Adjustment Period," The World Bank Economic Review, World Bank, vol. 5(1), pages 57-82, January.
    5. Ravallion, Martin & van de Walle, Dominique, 1989. "Cost of living differences between urban and rural areas in Indonesia," Policy Research Working Paper Series 341, The World Bank.
    6. Frankenberg, E. & Thomas, D. & Beegle, K., 1999. "The Real Costs of Indonesia's Economic Crisis: Preliminary Findings from the Indonesia Family Life Surveys," Papers 99-04, RAND - Labor and Population Program.
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    Cited by:

    1. Robert J. Hill & Iqbal Syed, 2010. "Improving International Comparisons of Real Output: The ICP 2005 Benchmark and its Implications for China," Discussion Papers 2010-25, School of Economics, The University of New South Wales.
    2. Robert J. Hill & Iqbal A. Syed, 2015. "Improving International Comparisons of Prices at Basic Heading Level: An Application to the Asia-Pacific Region," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(3), pages 515-539, September.
    3. repec:grz:wpaper:2012-07 is not listed on IDEAS
    4. Widodo, Tri, 2000. "The Impact of Economic Crisis on Welfare of Rural and Urban Households: a Case Study of Indonesia," MPRA Paper 78114, University Library of Munich, Germany.
    5. Emmanuel Skoufias, 2001. "Changes in regional inequality and social welfare in Indonesia from 1996 to 1999," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(1), pages 73-91.
    6. Asep Suryahadi & Sudarno Sumarto & Daniel Suryadarma & Rima Prama Artha, "undated". "Asesmen Ulang atas Ketimpangan dan Perannya dalam Pengurangan Kemiskinan di Indonesia," Working Papers 3468, Publications Department.
    7. Dhanani, Shafiq & Islam, Iyanatul, 2002. "Poverty, Vulnerability and Social Protection in a Period of Crisis: The Case of Indonesia," World Development, Elsevier, vol. 30(7), pages 1211-1231, July.
    8. repec:agg:journl:3579 is not listed on IDEAS
    9. Daniel Suryadarma & Rima Prama Artha & Asep Suryahadi & Sudarno Sumarto, "undated". "A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia," Working Papers 364, Publications Department.
    10. Muhammad Nashihin, 2009. "An examination of methods to estimate poverty line in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 1(3), pages 161-175, April.
    11. repec:agg:journl:3608 is not listed on IDEAS
    12. Bas van Leeuwen & Peter Foldvari, 2012. "The development of inequality and poverty in Indonesia, 1932-1999," Working Papers 0026, Utrecht University, Centre for Global Economic History.
    13. Daniel Suryadarma & Wenefrida Dwi Widyanti & Asep Suryahadi & Sudarno Sumarto, "undated". "From Access to Income: Regional and Ethnic Inequality in Indonesia," Working Papers 356, Publications Department.
    14. Emmanuel Skoufias & Asep Suryahadi, 2000. "Changes in Household Welfare, Poverty and Inequality During the Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(2), pages 97-114.
    15. Menno Pradhan, 2001. "Welfare Analysis with a Proxy Consumption Measure – Evidence from a Repeated Experiment in Indonesia," Tinbergen Institute Discussion Papers 01-092/2, Tinbergen Institute.
    16. repec:agg:journl:1159 is not listed on IDEAS
    17. Asep Suryahadi & Sudarno Sumarto & Daniel Suryadarma & Wenefrida Dwi Widyanti, "undated". "Dari Akses hingga Pendapatan: Ketimpangan Antarwilayah dan Antaretnis di Indonesia," Working Papers 3463, Publications Department.

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