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External Shocks, Household Consumption and Fertility in Indonesia

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  • Kim Jungho
  • Alexia Prskawetz

Abstract

This paper examines the impact of idiosyncratic income shocks on household consumption, educational expenditure and fertility in Indonesia, and assesses whether the investment in human capital of children and fertility are used to smooth household consumption. Using six different kinds of self-reported economic hardships, our findings indicate that coping mechanisms are rather efficient for Indonesian households that perceive an economic hardship. Only in case of unemployment we find a significant decrease in consumption spending and educational expenditure while fertility increases. Theses results indicate that households that perceive an unemployment shock use children as a means for smoothing consumption. Regarding the death of a household member or natural disaster we find that consumption even increases. These results are consistent with the argument that coping mechanisms even over-compensate the actual consumption loss due to an economic hardship. One important lesson from our findings is that different types of income shock may lead to different economic and demographic behavioral adjustments and therefore require specific targeted social insurance programs.

Suggested Citation

  • Kim Jungho & Alexia Prskawetz, 2009. "External Shocks, Household Consumption and Fertility in Indonesia," VID Working Papers 0604, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
    • Handle: RePEc:vid:wpaper:0604
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    References listed on IDEAS

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    Cited by:

    1. M. Jehangir Khan & Wei Yin & Aqsa Anwar, 2020. "Macro Shocks and Child Grade Attainment in Rural Pakistan," PIDE-Working Papers 2020:16, Pakistan Institute of Development Economics.
    2. Marcos A. Rangel & Jenna Nobles & Amar Hamoudi, 2020. "Brazil’s Missing Infants: Zika Risk Changes Reproductive Behavior," Demography, Springer;Population Association of America (PAA), vol. 57(5), pages 1647-1680, October.
    3. Nguyen, Thanh-Tung & Nguyen, Trung Thanh & Grote, Ulrike, 2020. "Multiple shocks and households' choice of coping strategies in rural Cambodia," Ecological Economics, Elsevier, vol. 167(C).
    4. Parlow, Anton, 2016. "Birth and Fertility during War: Afghanistan from 2007 to 2010," MPRA Paper 76366, University Library of Munich, Germany.
    5. Mehmet Serkan Tosun & Jingjing Yang, 2018. "Determinants of Fertility and Population Policies in MENA Countries," Working Papers 1219, Economic Research Forum, revised 12 Sep 2018.
    6. Aparajita Dasgupta & Anahita Karandikar & Devvrat Raghav, 2024. "Road Access, Fertility, and Child Health in Rural India," Population and Development Review, The Population Council, Inc., vol. 50(1), pages 117-147, March.
    7. Abdoulaye Ouedraogo & Mehmet S. Tosun & Jingjing Yang, 2018. "Fertility and population policy," Public Sector Economics, Institute of Public Finance, vol. 42(1), pages 21-43.
    8. Parlow, Anton, 2016. "Adult Health Outcomes during War: The Case of Afghanistan," MPRA Paper 76365, University Library of Munich, Germany.
    9. Santoso, Rokhedi Priyo & Sriyana, Jaka, 2020. "The Effect of Idiosyncratic Shocks on Labor Market Outcomes of Informal Households in Indonesia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(2), pages 13-27.
    10. Sellers, Samuel & Gray, Clark, 2019. "Climate shocks constrain human fertility in Indonesia," World Development, Elsevier, vol. 117(C), pages 357-369.
    11. Marek Šedivý, 2023. "Mortality shocks and household consumption: the case of Mexico," Review of Economics of the Household, Springer, vol. 21(4), pages 1289-1358, December.

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    Keywords

    Consumption; Insurance; Fertility and Indonesia;
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