A Dream of Offspring: Two Decades of Intergenerational Economic Mobility in Indonesia

Abstract

Using the Indonesian Family Life Survey we measure intergenerational expenditure mobility by applying logistic and unconditional quintile regressions (UQR) to explore how intergenerational persistence (IGP) varies across the distribution of children’s expenditure. We find high absolute mobility and relative mobility among the bottom 40 percentiles, reflecting children’s success at climbing above their parents on the economic ladder. Around 9.29% of parents in the lowest quintile were able to have their children rise to the highest quintile, while only 35% of parents in the highest quintile were able to keep their children in this position. UQR estimations show a U-shaped relationship between parents’ and children’s expenditure ranks, with intergenerational expenditure elasticity ranging from 0.08 to 0.252. IGP is highest in the middle-class group. The strongest determinants of mobility are children’s years of schooling, children’s age, the gender of the household head and children’s asset ownership.