Recovery from early life shocks: Evidence from Indonesia

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Date and Time: 
Thursday, October 19, 2017
12:00 pm – 1:00 pm

Using information from the fifth wave of Indonesian Family Life Survey, we examine the extent to which the Indonesian primary school construction program (INPRES) of the 1970s helped treated individuals to recover from early life investment shock proxied by low rainfall in the first year of life. We distinguish between the extent of recovery from the extent of catchup, heterogeneity in the impact of INPRES, and dynamic complementarity. Both INPRES and higher than district-specific historical median levels of rainfall in the first year of life had positive effect on education independently and INPRES helped disadvantaged individuals recover almost entirely from the early life low rainfall shock. Moreover, individuals with low rainfall in the first year of life who were treated by the school construction program caught up almost completely to those who experienced high rainfall. While one school built per 1,000 children was associated with 0.38 extra years of schooling for individuals who experienced low rainfall in the first year of life, it added only 0.04 extra years of schooling for those who experienced high rainfall in the first year of life. Evidence suggest that this was a result of deterioration of school infrastructure and teacher quality and increased competition to get into middle and high schools that accompanied primary school construction program and affected high rainfall individuals disproportionately. We find that as schools got more time to respond to the situation, the difference in the impact of INPRES vanished.