Health, Poverty Reduction, Social Development and Poverty

Is Indonesia’s subsidized rice program benefitting its children?

Is Indonesia’s subsidized rice program benefitting its children?

Indonesia’s subsidized rice program, RASKIN (also known as Operasi Pasar Khusus), constitutes the longest running and the largest in-kind transfer for poor households in Indonesia. In 2010, government expenditure on RASKIN accounted for 53% of the total household-targeted social assistance. What has been the impact of this program on child health in Indonesia? Our recent paper (Gupta and Huang 2018) is, in this regard, the first attempt in the literature to analyze this issue in the context of Indonesia.

What makes this issue important? The simple answer to this is the demography and economy of Indonesia. Indonesia is a nation with a predominantly young population. As per the 2010 population census, children (aged below 18 years old) constitute around 34% of the population (UNICEF 2012). Out of this share, nearly 56% (44.3 million children) live in households with earnings of less than $2 purchasing power parity per capita per day, and about 17% of them live below the national poverty line (UNICEF, 2012). Childhood deprivation has been linked to behavioral problems, poorer health, lower IQ scores, and inferior academic achievements (Duncan, Brooks-Gunn, and Klebanov 1994). Moreover, children born in poor households have been found to have worse adolescent and adult outcomes compared to those born in non-poor households (Ratcliffe and McKernan 2010).

Although poverty reduction programs have been implemented in several countries, we still know little about their impact on child development, especially in the context of developing countries. Our paper addresses this gap in the literature and evaluates the impacts of the world’s biggest rice subsidy program, the RASKIN program, on the health outcomes of children.

Data and technique

Using data from five rounds of the Indonesian Family Life Survey (IFLS) covering the period 1993–2014, our study traces the impact of the RASKIN program on the health outcomes of children aged 15 years or younger. We gauge child health outcomes using multiple anthropometric measures, including weight for age, height for age, and weight for height. We classify children into different age cohorts and use the two-stage difference-in-difference estimator developed by Donald and Lang (2007) and Greenstone and Hanna (2014) to perform our empirical analysis. This approach allows us to assess child-level gains after accounting for the length (number of years) for which the child’s household was enrolled in the program.

As a robustness check, we use the “aggregation” technique developed by Bertrand, Duflo, and Mullainathan (2004). In this study the policy variable, RASKIN, operates at the household level, while we aim to analyze health outcomes at the individual child level. Bertrand, Duflo, and Mullainathan (2004) suggest that estimation using such multi-level data can result in distorted inference due to serial correlation. The standard errors may be underestimated due to correlation between children’s health outcomes within a given household over time. Our “aggregation” technique accounts for this limitation by aggregating the data into two periods, before and after RASKIN. However, it yields average household-level gains.

Findings

Overall, we find that children living in households that participated in the RASKIN program showed improved anthropometric health outcomes. The estimated gains in height for age range between 0.19 and 0.96 centimeters per year, the gains in weight for age range between 0.08 and 0.21 kilograms per year, and the gains for weight for height range between 0.003 and 0.0032 kilograms per centimeter for children aged 15 years or younger. We also find that the gains are higher for children from relatively poorer households or less-developed regions. Our results are robust to different specifications, placebo tests, and subgroup analysis.

In addition, we examine the long-run impact of the RASKIN program by tracing the health outcomes of two cohorts of children aged between 0 and 5 years (i) in 1993 and (ii) in 1997 until 2014 (the latest round of the survey). We find evidence of positive long-run gains from RASKIN participation. The availability of two rounds of the survey prior to the introduction of RASKIN in 1998, i.e., IFLS 1 in 1993 and IFLS 2 in 1997, allows us to exploit the impact of the timing of the program. We find that the gains were stronger for the younger cohort (0–5 years old in 1997), which started to receive the RASKIN rice earlier in their childhood.

Despite large criticism of the RASKIN program for its inefficiencies and irregularities, we find that overall the program still has a significant positive impact on child welfare in Indonesia. The program’s focus could be improved through better targeting of poor households with greater numbers of dependents and, unlike the current provision, the monthly allotment of rice could be made proportional to the size of households. RASKIN continues to receive political attention, and it is hence important for policymakers to have a comprehensive understanding of the benefits of the program. Our study analyses one aspect of household welfare, that is, child nutrition. However, not many studies have analyzed the impact on overall household welfare in terms of income, consumption, and well-being. These may constitute important issues for future research.

Read the working paper here.
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References:

Bertrand, M., E. Duflo, and S. Mullainathan. 2004. How Much Should We Trust Differences-in-differences Estimates? The Quarterly Journal of Economics 119(1): 249–275.
Donald, S.G., and K. Lang. 2007. Inference with Difference-in-differences and Other Panel Data. The Review of Economics and Statistics 89(2): 221–233.
Duncan, G. J., J. Brooks‐Gunn, and P.K. Klebanov. 1994. Economic Deprivation and Early Childhood Development. Child Development 65(2): 296–318.
Greenstone, M., and R. Hanna. 2014. Environmental Regulations, Air and Water Pollution, and Infant Mortality in India. The American Economic Review 104(10): 3038–3072.
Gupta, P., and B. Huang. 2018. In-kind Transfer and Child Development: Evidence from Subsidized Rice Program in Indonesia. ADBI Working Paper No. 826. Tokyo: Asian Development Bank Institute.
Ratcliffe, C., and S. McKernan. 2010. Childhood Poverty Persistence: Facts and Consequences. Washington, DC: The Urban Institute.
UNICEF. 2012. Child Poverty and Disparities in Indonesia: Challenges for Inclusive Growth Challenges for Inclusive Growth. National report.

Prachi Gupta

About the Author

Prachi Gupta was a research associate at ADBI at the time of writing. She will soon be joining Temple University as a faculty member.
Bihong Huang

About the Author

Bihong Huang is a research fellow at the Asian Development Bank Institute, Tokyo.

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