Education Reform

Por: University of Melbourne.

Over the past two decades, income inequality has been increasing in Indonesia, leading to growing worries about disparities in living standards and education.

A particular concern of economists in this environment of climbing inequality is the issue of intergenerational mobility – the extent to which parents’ education or income affects the socioeconomic status of their offspring.

Scholars have described a strong relationship between inequality and social immobility – meaning that the greater the inequality in a country, the greater likelihood that someone will inherit their parents’ socioeconomic status. This finding has been dubbed the “Great Gatsby curve”,(link is external) in reference to the way that the book’s title character defies this relationship and overcomes his simple upbringing.

Educational attainment is one of the most common measures used by economists and sociologists to determine the extent to which socioeconomic status is transferred from one generation to the next. Indonesia has invested huge amounts in education and implemented several progressive policies designed to promote mobility.

In fact, government spending on education has more than doubled since the New Order period. Since 2009, more than 20 per cent of the state budget has been spent on education, in accordance with the Law 20 of 2003 on the National Education System (although there is some debate about how this 20 per cent figure is calculated). These funds have been used to implement a variety of progressive policies, ranging from scholarship programs for poor students to elimination of school fees and school grants.

As the first member of my Betawi family to pursue higher education, I wondered how many other Indonesians had a similar experience to me. What is the relationship between parental education and children’s schooling in Indonesia? Are the government’s efforts to expand education making it any easier for people from families without high levels of education to attain higher levels of schooling?

To explore these questions, I examined the results of four waves of the Indonesian Family Life Survey (IFLS), from 1997, 2000, 2007 and 2015. I examined the educational achievement (in terms of years of schooling) of young people aged 16 to 27 at the time of the survey. My study examined the educational achievement of young people against their father’s education. This is because although many studies have shown only slight differences between whether a mother or father’s education level is used in these comparisons, some(link is external) studies(link is external)argue that the father’s education can be more important for the outcomes of their offspring.

The results showed some interesting findings. First, the average years of schooling increased from 9.21 in 1997 to 10.71 in 2015. Both boys and girls increased their total years of schooling. Average years of schooling for boys improved from 9.2 in 1997 to 10.53 in 2015. Girls fared slightly better, with average years of schooling increasing from 9.2 in 1997 to 10.9 in 2015.

Significantly, the study showed an increase in educational mobility from 1997 to 2015. To examine mobility, I calculated an “intergenerational persistence” coefficient – a measure of the degree to which a father’s education affects children’s education. This coefficient decreased from 0.53 in 1997 to 0.44 in 2015. Notably, there was little change from 1997 to 2007, when the coefficient decreased to 0.51, suggesting that most improvements in mobility have occurred over the past decade.

Despite the improvements observed, however, parental background still plays a major role in shaping children’s futures. In fact, the coefficient of persistence is still considerably higher in Indonesia than in most other nations, with Latin American countries the only close match for Indonesia.

Further, my study somewhat surprisingly showed little difference in intergenerational persistence between urban and rural areas. Living in an urban, developed area seemingly does not automatically promote greater opportunities for educational mobility compared to rural areas. In fact, my study showed that although mobility has improved in urban areas over recent years, historically, mobility was greater in rural areas than in urban ones.

Finally, the intergenerational coefficient declined from 0.55 in 1997 to 0.45 in 2015 for women, and from 0.51 in 1997 to 0.43 in 2015 for men. These findings suggest that female students are less mobile than male students, a finding that is common to many other studies. However, in the Indonesian case, the gap between males and females has narrowed significantly over recent years, and there is now little difference in mobility between genders.

What explains these results? Given the decline in intergenerational persistence over the past decade, there are suggestions that the government’s hefty investment in education may be starting to improve mobility. In 2007-2008, the government spent about 16 per cent of the state budget on education. Since 2009 it has consistently allocated more than 20 per cent.

Past studies have shown that total public expenditure on education has a positive relationship with mobility – the more a government spends on education, the more mobile students become. Public investment in education can compensate for a lack of investment in education by poor families.

One of the most prominent educational policies over the past decade has been the implementation of the School Operational Assistance Grants (BOS). These grants are provided directly to schools every three months on the basis of the number of students at the school. They are designed to increase the enrolment rate by reducing the costs of education borne by parents. Schools can also use BOS funds for activities such as personnel management, infrastructure and professional development.

In 2012, the government also introduced a new regulation that prohibits the charging of fees in primary and junior secondary schools but allows for voluntary parental contributions to maintain the active engagement of parents in school development.

On the demand side, the government has expanded its assistance program for poor students, the Indonesia Smart Card (KIP). Through this program, students are provided with a cash-transfer based on school attendance. The funds can be used for education fees, or other costs associated with attending school, such as transportation, books and uniforms.

In addition to increases in educational expenditure, the government has also put considerable efforts into promoting early childhood education over recent years. The enrolment ratio of children in early childhood education has increased from 15 per cent in the early 2000s to 47 per cent in 2012. Improvements in early childhood education could have also played a role in increasing mobility.

My small study suggests that parental education is still a major determinant of educational outcomes in Indonesia. Further studies are required to confirm my findings, but government investment in education does appear to be making a difference.