Impact of Economic Situation on Availability of Secondary Education in Indonesia

Introduction. School transition is important as a benchmark for education progress in many developing countries, including Indonesia. Moreover, the school transition has been identified as a crucial turning point in school progress in Indonesia. The purpose of the article is to analyze the role of income, gender against the school transition in Indonesia. Materials and Methods. Methods in this research were conducted in two phases, fixed effect and conditional logit. The data used are from the Indonesian Family Life Survey and to capture the occurrence of several events in Indonesia with the risk associated with economic crisis in Indonesia against school transition. Results. A sharp permanent income decrease shock will have a larger effect upon parental investment than one realized later in the child’s lifetime and the effect of permanent household income shocks is significant and decreases in older childhood, as predicted by the permanent income hypothesis. When household income is faced with shocks constraint conditions of loans and credit market imperfections, girls tend to be used as a coping strategy to support private consumption in doing consumption smoothing, especially transition from primary to junior secondary education. Discussion and Conclusion. Permanent income have long-term consequences of the decision-making process in the school transition. Girls experienced an increase in continuing education, especially at higher levels. Furthermore, when household income is faced with shocks constraint conditions of loans and credit market imperfections, girls tend to be used as a coping strategy to support private consumption in doing consumption smoothing. Keywords: complete secondary education, role of income, gender, fixed effect, conditional logit, school transition

THE POLITICS OF FINANCIAL DEVELOPMENT AND CAPITAL ACCUMULATION

This paper considers the political economy of financial development in an overlapping generations model that incorporates credit market imperfections, and shows that income inequality is a determinant of financial and economic development. Individuals have an opportunity to start an investment project at a fixed cost, but their income to finance the cost is unequal. The government proposes a policy financed by taxation that mitigates credit market imperfections, the implementation of which is determined through majority voting. The policy benefits middle-income individuals who can start the investment only after the implementation of the policy. The policy is, however, against the interest of the rich who wish to block such new entry, and that of the poor who wish to avoid the tax burden. Whether the policy obtains majority support depends on income inequality. High income inequality makes the policy hard to implement, which causes financial and economic underdevelopment.

The effect of globalization and credit market imperfections on the incidence of child labour

Purpose The purpose of this paper is to explore the effect of globalization and credit market imperfections on child labour. Design/methodology/approach Analysis is based on cross-country regression framework, incorporating 129 developing countries for the period 1970-2010. Findings The findings indicate that countries that are more open to trade and having higher foreign direct investment inflow have lower incidence of child labour. As child labour in export-related industries is hard to find, trade sanctions may not have a significant effect on child labour. Further study concludes that income of the bottom quartile of the population is the best representation of the income of the poor when studying child labour. Research limitations/implications The study uses the data compiled by International Labour Organization (ILO). Though much of the variation in the data is because of the adjustments made by ILO, this is the only comparable cross-country estimates available. Hence in the absence of the cross-country comparable estimates, many empirical studies have used this data set (e.g. Cigno et al., 2002; Dehejia and Gatti, 2002; Rogers and Swinnerton, 2001). This study acknowledges this limitation but again in the absence of any comparable estimates, the assessment is also based on this data set. Originality/value Study contributes in the literature by comparing the effect of export and trade and by exploring the effect of an alternate measure of the income, estimated by using Gini coefficient, on child labour. Further studies exploring the effect of globalization did not explore the presence of imperfect credit market, however, this study has explored the effect of credit market imperfections as well.