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The Impact of Economic Crisis on Welfare of Rural and Urban Households: a Case Study of Indonesia

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  • Widodo, Tri

Abstract

The economic crisis has led to decreases in the welfare of urban and rural households. This paper applies EV (equivalent variation) and CV (compensating variation) derived from the Linear Expenditure System (LES) to calculate the change in the welfare of urban and rural households that were caused by changes in income and prices. This paper has several conclusions. First, urban families were affected by the crisis in more severe condition rather than rural families. Second, among the regional -Sumatra, Java, Kalimantan, Sulawesi and others-urban and rural families in Kalimantan were affected by the economic crisis in the worst condition than the other regions.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:78114
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    References listed on IDEAS

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    1. Deaton, Angus, 1986. "Demand analysis," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 30, pages 1767-1839, Elsevier.
    2. 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.
    3. R. C. Geary, 1950. "A Note on "A Constant-Utility Index of the Cost of Living"," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 18(1), pages 65-66.
    4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    Cited by:

    1. Widodo, Tri, 2001. "An Alternative of Poverty Line Measurement: a Case Study of Indonesia," MPRA Paper 78323, University Library of Munich, Germany.

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    More about this item

    Keywords

    Welfare impact; Equivalent Variation (EV); Compensating Variation (CV); Linear Expenditure System (LES); Seemingly Uncorrelated Regression (SUR;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General

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