Aggregate shocks and how parents protect the human capital accumulation process: An empirical study of Indonesia
Wu, Treena, Borghans, Lex and Dupuy, Arnaud (2008). Aggregate shocks and how parents protect the human capital accumulation process: An empirical study of Indonesia.
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Author Wu, Treena
Borghans, Lex
Dupuy, ArnaudTitle Aggregate shocks and how parents protect the human capital accumulation process: An empirical study of Indonesia Publication Date 2008 Abstract We exploit differences in Indonesian education expenditures in response to the Asian Financial Crisis (AFC) to document human capital investment behavior. Indonesians from rich and poor households adopted different types of strategies to cope with high inflation levels and volatile currency exchange rates. While we find that consumption levels changed little, education expenditures fell and the cost of education rose disproportionately higher. As a consequence, tradeoffs had to be made in the human capital investment of children aged 6 ��� 14. At the extensive margin, children were still able to receive some form of education, be it formal or informal. But the extent to which parents from different income levels were still able to maintain the educational quality attained by their children is questionable. To attempt to understand the elusive concept of quality of educational outcomes, we use the EBTANAS national achievement test scores for transition to a higher level of schooling. Our finding is that the aggregate shock caused some children to self-select themselves out of transition to the next stage despite passing their tests. -
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