Cash Crop Choice and Income Dynamics in Rural Areas: Evidence for Post-Crisis Indonesia

Arbeitspapier

In this paper we investigate the factors affecting income levels, income growth, and poverty reduction in rural Indonesia following the crisis of 1997/98. We particu- larly investigate the relative roles of non-farm incomes, productivity improvements achieved via changes in crops versus improvements on the same crops, and demographic changes induced by the crisis on income dynamics in rural Indonesia. Using a unique household panel data set for Central Sulawesi that allows us to control for a large set of household and geographical characteristics, household fixed effects as well as endogeneity issues, we find that falling household size and the adoption and intensification of new cash crop varieties can explain a substantial part of the observed post-crisis developments. Moreover, we compare our results to cross-sectional data from SUSENAS, Indonesia\'s large scale national household survey. While the overall determinants of rural incomes are very similar across both data sets, we find that the importance of agricultural self-employed income seems to be higher in Central Sulawesi than in most other parts of Indonesia. Although several factors could explain these differences, lessons from our Central Sulawesi data suggests that unexploited potentials in the production of cash crops in other areas of Indonesia might contribute to these findings.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 33

Classification and Topics

• Classification: Wirtschaft ; General Welfare; Well-Being ; Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets ; Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment ; General Equilibrium and Welfare Economic Analysis of Regional Economies
• Subject: Crop choice ; Income diversification ; non-farm sector ; rural development ; Indonesia

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Klasen, Stephan ; Priebe, Jan ; Rudolf, Robert
• Event: Veröffentlichung
• (who): Georg-August-Universität Göttingen, Courant Research Centre - Poverty, Equity and Growth (CRC-PEG)
• (where): Göttingen
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/90479
• Last update: 20.09.2024, 8:25 AM CEST