The Rural-Urban Divide and Intergenerational Educational Mobility in a Developing Country : Theory and Evidence from Indonesia
This paper provides an analysis of the rural-urban divide in intergenerational educational mobility in Indonesia with two distinguishing features. First, the estimating equations are derived from theory incorporating rural-urban differences in retu...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/414131604430277237/The-Rural-Urban-Divide-and-Intergenerational-Educational-Mobility-in-a-Developing-Country-Theory-and-Evidence-from-Indonesia http://hdl.handle.net/10986/34731 |
| Summary: | This paper provides an analysis of the
rural-urban divide in intergenerational educational mobility
in Indonesia with two distinguishing features. First, the
estimating equations are derived from theory incorporating
rural-urban differences in returns to education and school
quality, and possible complementarity between parent’s
education and financial investment. Second, the data are
suitable for tackling the biases from sample truncation due
to coresidency and omitted cognitive ability heterogeneity.
The evidence rejects the workhorse linear intergenerational
educational persistence equation in favor of a convex
relation in rural and urban Indonesia. The rural-urban
relative mobility curves cross, with the children of low
educated fathers enjoying higher relative mobility in rural
areas, while the pattern flips in favor of the urban
children when the father has more than nine years of
schooling. However, the rural children face lower absolute
mobility across the whole distribution of father's
schooling. Estimates from the investment equation suggest
that, in urban areas, children~^!!^s peers are complementary
to financial investment by parents, while the adult role
models are substitutes. In contrast, separability holds in
villages. Peers and role models are not responsible for the
convexity in both rural and urban areas, suggesting more
efficient investment by educated parents as a likely
mechanism, as proposed by Becker et al. (2015, 2018). The
theoretical relation between the intercepts of the mobility
and investment equations helps in understand whether school
quality is complementary to or a substitute for parental
financial investment. This paper finds evidence of
substitutability, implying that public investment to improve
the quality of rural schools is desirable on both equity and
efficiency grounds. |
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