Abstract
Essay 1: We reexamine the effect of economic development on the level of democracy based on the data sets of Acemoglu et al. (2008) with a novel regression specification utilizing a zero-one-inflated beta distribution for the response variable democracy. Contrary to the results of Acemoglu et al. (2008), some support of causality is found particularly when explaining heteroscedasticity. We also find democracy is a bimodal variable and approximate the distribution using two separate samples of OECD and non-OECD countries. Our results indicate that higher incomes are associated with higher democracy levels in the OECD sub-sample, however for non-OECD the association is insignificant. Essay 2: Education is a strong predictor of economic performance. Educational inequality in opportunity could thus make a significant contribution to earning disparities. Following Ferrerira et al. (2014) parametric method, we construct aggregate indices of inequality in educational opportunities for thirteen Indonesian provinces in the years 1997, 2000 and 2007. The contribution of this paper is to define individual indices of the power of circumstances, which measure the effect that the accumulation of factors, outside individual control, has on individual educational achievements and earnings in the short and long run. We find that-for the period considered- there has been a declining trend in inequality of educational opportunities, albeit not in all provinces. Our findings also suggest that parental educational background is the most significant factor for school survival. Additionally, the effect that circumstances exert on future individual educational achievements and early earnings perspectives tends to persist over time, but only to a very small extent. Our causal model, which relates educational budget policy to equality of opportunity, shows that the educational budget has a negative impact on the youngest cohorts, thus causing us to question the effectiveness of the allocation of resources to primary and intermediate schools. Essay 3: In this paper, we evaluate the short run impact of two educational subsidies that were part of the fuel subsidy reduction compensation programs in Indonesia during the 2006/2007 academic year, namely BKM scholarships and BOS out-of-pocket expenses, on education outcomes and household expenditure. These are two different poverty-based targeting transfer programs that have been represented by one single treatment variable in our data source, the Indonesian Family Life Survey (IFLS), thus the clear identification of each program is very important to the disentanglement of the estimated effects. The evalution becomes complicated because there is an effect of the past scholarship program to be considered, as well as overlapping periods of two interventions and the presence of BOS in the higher hierarchy as the school focused intervention at the same time. Utilizing the combination of several methods, we find that targeting the poor was done inefficiently and that the transfer coverage was too small. In addition, we find that educational attainment increases, on average, by 4 months after one year of intervention for compulsory grades 1-9. This magnitude, however, is an upper bound of the effect of intervention accumulation over time and is most likely coming from the BOS spillover effect. We also observe crowding out household expenditure to anticipate the transfers. Finally, we find a positive relationship between past scholarship programs and educational attainment, which suggests that targeted subsidies also have a long term impact.
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