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The Effect of Income Shocks and Credit Constraint on Child Labor Participation and Poverty: The Case of Indonesia

Author

Listed:
  • Pipit Pitriyan

    (Department of Economics, Padjadjaran University)

  • Ahmad Komarulzaman

    (Department of Economics, Padjadjaran University)

Abstract

Lies near the Eurasia and Indo-Australia’s border plate, Indonesia is categorized as natural disaster prone areas. It is common for Indonesian to experience earthquakes that occurs due to volcanic activities or ground movement. The most frequent natural disasters hit these districts are: landslide, earthquake, and flood. The other type of natural disaster is drought, which is more common to the rest of areas and more predictable compare to the previous disasters. For those who are living in disaster prone areas, disasters do not only destroy their assets, but also damages their source of income. Moreover, it can affect the decision of household related to the activity of their child. This study aims to analyze the effect of income shocks and credit constraints on poverty and child working activity in Indonesia. We will employ logit regression to estimate the effect of income shocks and credit constraints on income. Furthermore, multinomial logit estimate will be used to capture the effect of income shocks and credit constraints on household’s poverty status and household’s child activity. It is hipotized that the disaster-related-income-shock and constraints to acquire credit have significant effect on poverty as well as child working activity.

Suggested Citation

  • Pipit Pitriyan & Ahmad Komarulzaman, 2010. "The Effect of Income Shocks and Credit Constraint on Child Labor Participation and Poverty: The Case of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 201002, Department of Economics, Padjadjaran University, revised Jun 2010.
    • Handle: RePEc:unp:wpaper:201002
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    References listed on IDEAS

    as
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    2. Raddatz, Claudio, 2007. "Are external shocks responsible for the instability of output in low-income countries?," Journal of Development Economics, Elsevier, vol. 84(1), pages 155-187, September.
    3. Skoufias, Emmanual & Parker, Susan W., 2002. "Labor market shocks and their impacts on work and schooling," FCND briefs 129, International Food Policy Research Institute (IFPRI).
    4. Gloria M. Rubio & Isidro Soloaga, 2004. "Assessing the Vulnerability of Agricultural Households to Macroeconomic Shocks: Evidence from Mexico," The Electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations, vol. 1(1), pages 45-62.
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    More about this item

    Keywords

    shock; credit constraint; child labor; poverty; disaster;
    All these keywords.

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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