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Household Responses to the Financial Crisis in Indonesia: Longitudinal Evidence on Poverty, Resources, and Well-Being

Household Responses to the Financial Crisis in Indonesia: Longitudinal Evidence on Poverty, Resources, and Well-Being

Chapter:
(p.517) 12 Household Responses to the Financial Crisis in Indonesia: Longitudinal Evidence on Poverty, Resources, and Well-Being
Source:
Globalization and Poverty
Author(s):
Duncan ThomasElizabeth Frankenberg
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226318004.003.0013

This chapter explores the impact of financial crisis on the poor in Indonesia. It demonstrates that in the first year of the crisis, poverty rose by between 50 and 100 percent, real wages declined by around 40 percent, and household per capita consumption fell by around 15 percent. The crisis affected the poorest, the middle-income households, and households in the upper part of the income distribution in Indonesia. The financial crisis was accompanied by large changes both in the absolute price level and in relative prices. The evidence on human capital investments indicates that as the crisis unfolded, several dimensions of education and health were deleteriously affected, with the poorest and most vulnerable paying the biggest price in several important dimensions of human capital. The empirical evidence in the Indonesia Family Life Survey (IFLS) indicates that the crisis led in a dramatic decline in the standard of living.

Keywords:   financial crisis, poor, Indonesia, poverty, wages, household, income distribution, human capital, Indonesia Family Life Survey

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