Does conditional cash transfer change educational aspirations? Evidence from Indonesia

Abstract

Purpose The paper aims to examine whether conditional cash transfer (CCT) program has effect on educational aspirations of poor parents for their children. Specifically, it investigates the effect of Indonesian CCT program, Family Hope Program, on the number of schooling years parents aspire their children to attain. Design/methodology/approach This paper uses data from the Indonesian Family Life Survey (IFLS) 2007 and 2014 to capture periods before and after the implementation of the Family Hope Program. Propensity score matching and difference-in-differences are employed to estimate the impact of the CCT program on parental education aspirations. Findings This research finds that CCT program increases parents' aspiration of their children's education up to one schooling year. This impact is robust across all matching specifications. Research limitations/implications There is a limited sample size of the program participants as identified in the data set which would likely reduce statistical power of the estimator. The result is also potentially sensitive to hidden bias; hence it should be cautiously interpreted. Social implications From a policy viewpoint, the program is able to change parents' desire for their children to acquire more education. Given the program's concern on human capital of the children, this is a good sign that if the transfers were ceased the education of subsequent children would be less likely to return to pre-program levels. Originality/value Since the existing literature focuses on Latin America, no empirical evidence is found in other developing countries with different institutional setting. This paper makes important contributions by examining whether CCT program increases parents' educational aspirations in Indonesia, a lower middle-income country in Southeast Asia with salient sociodemographic status as the largest Muslim population and fourth most populous country in the world.

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