Abstract
Indonesia is committed to education but the Government of Indonesia still struggle with dropout problem at upper secondary school level, especially students from rural areas who dropping out of school before graduating. The dropout events can be explained through the demand for education. In 2008 Government of Indonesia introduced Bantuan Siswa Miskin program, the Cash Transfers for Poor Students (recently is known as Kartu Indonesia Pintar), in order to reduce numbers of dropouts. The program is mainly to cover students’ indirect costs and is implicitly used to increase students’ demand for education. The objective of this study is to get better understanding on the impact of government’s cash transfers on rural students’ dropout at upper secondary schools in Central Java Province. Primary data was collected from rural areas in all regencies and cities. The likelihood to drop out is estimated using Probit regressions. There are two main findings in this study. First, the result shows that higher education expenditure is significantly increasing the probability of rural students to drop out. Second, it is evidence that government’s cash transfers significantly diminish the rural students’ likelihood of dropping out. Based on the findings, it is suggested the Government of Indonesia must reduce education costs and the government also should expand the number of cash transfers for poor rural students.
Highlights
The data show that there are declining trends of poverty rates in the last 20 years, the Government of Indonesia is still continuously fighting poverty, mainly in rural areas
Respondents’ responses to the questionnaires were tabulated and coded and inserted into the Stata Software. 229 former upper secondary school students who live in rural areas and 458 parents/guardians participated in the study
Government of Indonesia must see the high education costs are the main problem for rural students and their parents and one of the best ways to reduce education costs is by subsidize it with the government’s cash transfer to poor rural students
Summary
The data show that there are declining trends of poverty rates in the last 20 years, the Government of Indonesia is still continuously fighting poverty, mainly in rural areas. One of the major challenges to improve educational sector is the problem of students from rural areas dropping out of school before graduating. World Bank (2013) indicates that one of the enrolment problems for rural students is due to the distance from students’ homes to their schools. The data indicate that low enrolment and dropout may be the main contribution to the low average years of schooling in rural areas. The increase of average years of schooling in rural areas from 2011 to 2016 is about 10.8%, almost double increase in comparison to urban areas in a same period (5.5%)
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