Finding out of the Determinants of Poverty Dynamics in Indonesia: Evidence from Panel Data

This study aims to examine the determinants of poverty dynamics in Indonesia. This study applies the spell approach of poverty experience and the ordered logit model to identify the poverty status of households: poor, transient poor (-), transient poor (+) and non-poor. Observing the Susenas balanced panel dataset of 2005 and 2007 covering 8,726 households, we found that 28% of poor households classified as poor (remained poor in two periods) while 7% of non-poor households are vulnerable to being transient poor (-). Our estimations confirmed that the important factors of poverty dynamics in Indonesia are educational attainment, number of household members, physical assets, employment status, health shocks, access to electricity, and changes in the household size, in the working sector and in the microcredit program. We also found that households living in Java-Bali are more vulnerable to negative shocks while households living outside Java-Bali are relatively resilient to negative shocks.